By Hilary Mare
NAMIBIA’S mining score and rank has deteriorated for the second straight year, the Fraser Institute Annual Survey of Mining Companies 2016 reveals.
According to the report, in 2014, Namibia was ranked as the 19th most attractive jurisdiction in the world when only policies were considered. The country fell to 29th in 2015 and dropped again to rank 38th this year.
“After this year’s decline, Namibia no longer ranks as the second most attractive jurisdiction in Africa based on policy. Miners expressed increased concern over uncertainty regarding the administration, interpretation, or enforcement of existing regulations, the taxation regime, and trade barriers,” the report states.
The report also shared comments by a consulting company in the survey that denoted that a draft policy of local previously disadvantaged persons being circulated which models itself after South Africa which has clearly failed in its broad-based objectives posed a great danger to all existing or new companies in Namibia.
Another comment by an exploration company derived from the report states that: “The Ministry of Mines and Energy has added new conditions to renewals and new mineral licenses. The new conditions are not described in any Act, thus poorly defined and up to the discretion of the Minister. The issue of licenses has thus been delayed severely (months to years).
The survey is an attempt to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment. The survey was circulated electronically to approximately 2 700 individuals between August 30 and November 18 last year.
Survey responses have been tallied to rank provinces, states, and countries according to the extent that public policy factors encourage or discourage mining investment. A total of 350 responses were received for the survey, providing sufficient data to evaluate 104 jurisdictions. By way of comparison, 109 jurisdictions were evaluated in 2015, 122 in 2014, 112 in 2013, and 96 in 2012. The number of jurisdictions that can be included in the study tends to wax and wane as the mining sector grows or shrinks due to commodity prices and sectorial factors.
“It is shocking but not surprising. If we rectify what the report says we can climb out of it because we have the ability to do so,” CEO at Chamber of Mines of Namibia, Veston Malango told Confidente.
Africa’s median score on policy factors (PPI) improved this year. This was also the case for the region’s median investment attractiveness score. Africa’s overall investment attractiveness now ranks it ahead of the regions of Oceania, Latin America and the Caribbean, Asia, and Argentina. Two African countries—Zimbabwe (102nd) and South Sudan (97rd),—ranked in the bottom 10 of the survey rankings this year based on policy. Zimbabwe was also amongst the bottom 10 in the previous five years.
“Zimbabwe and Mozambique were the only two African jurisdictions in the global bottom 10 based on their overall investment attractiveness. Botswana is again the highest ranked jurisdiction in Africa on policy factors, ranking 12/104 in 2016, after ranking 14/109 in 2015. Botswana’s slightly higher score on the PPI reflects decreased concerns over labour regulations, the availability of labour and skills, and infrastructure,” extended the report.
In 2016, four African countries—Democratic Republic of Congo (DRC), Ghana, Ivory Coast, and Zambia—experienced improvements of over 10 points each in their PPI scores. The DRC had the largest improvement in Africa based on miners’ perceptions of policy.
The DRC’s improvement of over 17 points enabled the country to move up to 70th from 87th place in the previous year. Investors displayed decreased concern this year over socioeconomic agreements/community development conditions (-40 points), political stability (-34 points), and labour regulations (-29 points).
Ghana’s more than 12-point improvement and movement from 52nd in 2015 up to 31st this year, places Ghana as the second most attractive jurisdiction in Africa this year based on policy alone. Few investors indicated that political instability, the legal system, and uncertainty regarding the administration, interpretation, or enforcement of existing regulations were acting as deterrents to investment in the country this year.
Zambia (43rd) also saw a large improvement in its PPI score this year, allowing the country to move back into the top 50 countries, after ranking 61st last year. Zambia had large improvements in labour regulations and the availability of labour and skills.
Confidente. Lifting the Lid. Copyright © 2015