3/3/2018 Namibia Corruption Report

Namibia

Namibia Corruption Report

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Snapshot
Companies face a moderate risk of corruption in Namibia.
While the country su ers from less corruption compared to
other countries in the region, corruption remains common.
The country's public procurement sector is particularly
susceptible to corruption due to the monopoly of state-
owned companies (parastatals). The Anti-Corruption Act is
Namibia's primary anti-corruption law, covering passive
bribery, active bribery, attempted corruption, extortion and bribing a foreign public o cial.
A range of legislation covers other corruption o enses; however, despite a strong framework
for curbing corruption, enforcement of the legislation is inconsistent. Gifts and facilitation
payments given or received as an inducement for an act are illegal under the Anti-Corruption
Act, and there are few reports of gifts being expected. However, facilitation payments are
common.

Last updated: July 2017

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Judicial System
Judicial corruption presents a low to moderate risk to companies in Namibia. Bribes are
sometimes exchanges in return for obtaining favorable court decisions (GCR 2015-2016). A
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fourth of Namibian citizens perceive judges and magistrates to be involved in corruption

(GCB 2015). The country's courts are independent and generally free from government
interference (HRR 2016), but its judicial process is very slow due to inadequate sta ng,
which has led some to question the rule of law in Namibia (BTI 2016). Judges frequently chair
commissions of inquiry following public criticism of the government (BTI 2016). It is easier
and less time-consuming to enforce commercial contracts in Namibia compared to other
countries in Sub-Saharan Africa (DB 2017). Companies report cautious con dence in the
e ciency of the legal framework to settle disputes and challenge regulations (GCR 2016-
2017).

Namibia is not a signatory to the 1958 New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards and it is not a member state to the International
Centre for the Settlement of Investment Disputes (ICSID).

Police
Companies face a moderate risk when dealing with the Namibian police. Two in ve
Namibians believe the police force is involved in corruption, however, few claim to actually
have paid a bribe to the police (GCB 2015). Civilian authorities have e ective control over the
Namibian Police and adequate mechanisms to investigate and punish abuse and corruption
exist, but there are reports of corruption and impunity in Namibia's police (HRR 2016). Police
services in Namibia cannot be relied upon to protect companies from crime (GCR 2016-
2017). Half of rms pay for private security (ES 2014).

In July 2016, the head of human resources at the Namibian police was arrested over
corruption charges, including nepotism charges related to unduly promoting his brother-in-
law (The Namibian, July 2016).

Public Services
Companies face signi cant risks of corruption when interacting with public services in
Namibia. Companies report that irregular payments and bribes when dealing with utility
services are not common (GCR 2015-2016). Likewise, a low number of companies report
being expected to give bribes to obtain operating licenses or water/electrical connections (ES
2014). However, one in ve rms expects to pay bribes to obtain construction permits (ES
2014). Even though surveyed Namibians report very few instances of paying bribes or
giving gifts to government o cials to obtain documents, permits, health services or
household utilities, a quarter of citizens perceive local public o cials to be involved in
corruption (GCB 2015).

Namibia's state bureaucracy is ine cient and bloated; politically motivated appointments as
well as a doubling of civil servants combined with ubiquitous corruption is proving to be a
big problem for Namibia (BTI 2016). There are reports of corruption in relation to
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procurement for the electricity and water supply in Namibia (ICS 2016). Companies should
be prepared to deal with an ine cient public sector: Businesses consider government
administrative requirements to be burdensome (GCR 2016-2017). Starting a business in
Namibia involves ten di erent procedures and takes 66 days; more than double the time
required elsewhere in the region (DB 2017). Obtaining electricity only takes a third as long as
the regional average (DB 2017).

Land Administration
The land administration carries a moderate corruption risk for companies. Namibia's legal
system is e ective in enforcing property and contractual rights, although courts do have
backlogs (ICS 2016). Foreign investors should note that land reform is a growing political
issue, but no expropriations have occurred to date without appropriate compensation (ICS
2016). There are reports that local chiefs are being bribed in the land reform process (The
Namibian, Jan. 2017). Businesses report fairly high con dence in Namibia's property rights
regime (GCR 2016-2017). The country ranks among the worst in the world in relation to the
time, cost and number of steps involved in registering property (DB 2017).

In a recent case, the mayor of Windhoek was caught attempting to sell land held by the state
to family members for far less than the estimated value (BTI 2016). However, due to
Namibia's political system of patronage, the mayor of Windhoek was voted into parliament
again (BTI 2016).

Tax Administration
Companies face a moderate risk of corruption when dealing with Namibia's tax
administration. Namibian tax regulations do not represent a signi cant challenge for foreign
companies (GCR 2016-2017), but corruption and demands for bribery payments by tax
authorities are common (GCR 2015-2016). Nevertheless, a third of Namibians believe tax
o cials are corrupt (GCB 2015). The country performs better than the Sub-Saharan Africa
average in relation to paying taxes (DB 2017).

Customs Administration
Corruption by customs authorities does impede business in Namibia; import procedures are
very burdensome and irregular payments and bribes are common (GETR 2016). Businesses
rate the e ciency of clearance procedures as poor (GETR 2016). While Namibia performs
better than averages in Sub-Saharan Africa in relation to import compliance procedures,
export procedures regulation is enormously burdensome (DB 2017).

A NAD 3.5 billion tax evasion and money laundering scheme involving imports from China
has been uncovered. The businessmen involved would declare lower values for their 

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imports, which helped them dodge import duties and taxes (APA News, Feb. 2017).

Public Procurement
Companies face a high risk of corruption in Namibia's procurement sector. Bribes and
irregular payments are often exchanged in retrun for licenses and public contracts (GCR
2015-2016). Likewise, around one in ten rms indicate that they expect to give gifts to secure
government contracts (ES 2014). Companies perceive favoritism to widely a ect the decision
of o cials when awarding contracts and believe that public funds are sometimes diverted to
companies, individuals or groups due to corruption (GCR 2016-2017). In some industries
where private and state-owned companies (SOEs) compete, there has been a perception that
SOEs are granted favorable concessions (ICS 2016). A special concern in Namibia is the in ux
of Chinese businesses which frequently do not have to adhere to the same legal provisions
as local companies due to alleged corruption and favoritism (BTI 2016). Poorly conceived
regulations combined with a ballooning public procurement sector led to many instances of
procurement fraud (IPPR 2015). The Public Procurement Act of 2015, aimed at mending
these issues, entered into force in April 2017; more information can be found under the
legislation section.

Companies should be aware of the practice of "fronting"; a practice where a company tries
to evade the requirements of the Black Economic Empowerment Act of 2003 in order to be
able to bid on public contracts (Corruption Watch, May 2012). Under current laws, this
practice is hard to prosecute (The Namibian, Feb. 2016). State-owned companies (parastatals)
are closed to all investors (Namibian and foreign), and foreign investors participate in joint
ventures with parastatals only in certain sectors, such as mobile telecommunications;
nevertheless, the process is slow (ICS 2016). There has been an uptick in the number of high-
pro le challenges to tender decisions (ICS 2016). The Namibian judiciary has been reviewing
many tenders and has suspended a couple of awards (ICS 2016). For example, a tender
award worth NAD 6 billion to upgrade Namibia's main airport was nulli ed by Namibia's
Supreme Court after it found that proper procedures had not been followed in the
procurement process (The Namibian, Mar. 2017). Companies in Namibia are recommended
to use a specialised public procurement due diligence tool to help manage risks in the
sector.

Natural Resources
Companies should be aware that Namibia's extractive industries o er huge opportunities for
illicit enrichment, particularly through the granting of licenses for mining and shing (BTI
2016). Corrupt police o cers are said to take bribes for facilitating poaching in Namibia
(Oxpeckers, Sept. 2016). Poaching is prevalent due to a lack of resources for e ective
enforcement against wildlife crime; bribing of border o cials is also a contributing factor
(NFIC 2017). Namibia is sitting on some of Sub-Saharan Africa's largest unexploited oil

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resources. In general terms, Namibia has an adequate level of transparency in its mining
sector, however, lacks transparent mechanisms regulating oil exploration (Polus et al. 2015).

Legislation
The legal framework for curbing corruption in Namibia is strong, but enforcement is
inconsistent. The Anti-Corruption Act speci es and criminalizes all relevant corruption
o enses, including passive bribery, active bribery, attempted corruption, extortion, bribing a
foreign public o cial, money laundering and abuse of public o ce. The Act prescribes a ne
not exceeding NAD 500,000 and/or a prison term not exceeding 25 years for any of the
criminalized practices. Members of Parliament are required to disclose assets. Namibian law
also outlaws con icts of interest and potential abuses of power by public o cials, but
enforcement mechanisms are weak. Under the Public Service Act of 1995, civil servants are
not allowed to hold positions in the private sector while employed by the state, but the
Public Service Commission or the prime minister can grant exceptions, creating potential
con icts of interest. The Prevention of Organised Crime Act (POCA) seeks to combat
organized crime, money laundering and people tra cking. The Act imposes reporting
obligations on suspicions of unlawful activities and provides for the establishment of the
Criminal Assets Recovery Fund and Criminal Assets Recovery Committee. The Financial
Intelligence Act of 2012 (FIA) makes it mandatory for nancial institutions and designated
businesses to implement adequate policies and procedures, such as know-your-customer
policies and customer due diligence. The FIA did also establish the Anti-Money Laundering
Advisory Council as the policy-making body on Namibian Anti-Money Laundering (AML)
matters. The Public Procurement Act of 2015 established a new, more transparent board to
oversee public procurement processes. It imposes strict limits on the value of contracts
state-owned entities are able to close without involving the Central Procurement Board.
Furthermore, the Act also imposes a ve year ban and/or a NAD 5 million ne on rms found
guilty of engaging in illegal procurement practices. Namibia has rati ed the United Nations
Convention against Corruption and the African Union Convention on Preventing and
Combating Corruption.

Civil Society
Freedom of the press is guaranteed by the Constitution of Namibia. There are many private
publications that are critical of the government, but private broadcasters and independent
newspapers are not completely free from political interference (FitW 2016). Sometimes party
leaders issue harsh criticisms against the independent press (FitW 2016). There is no explicit
legal right for access to information (BTI 2016). Namibia's press environment is considered
'partly free' (FotP 2017).

Neither by law nor in practice are there any notable restrictions on the activities of civil
society organizations (FitW 2016). However, ministers have threatened and harassed NGOs
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in the past (FitW 2016). Due to Namibia's socio-politico environment, civil society groups can
be critical of the government, but they are unable to achieve change without government
support (BTI 2016). But Namibia's civil society lacks strength because of ine ective
management capacity, limited sta and weak organizational capabilities (BTI 2016).

Sources
 World Bank: Doing Business 2017.
 Freedom House: Freedom of the Press 2017.
 Namibia Financial Intelligence Centre: Trends and typology Report No 1 of 2017.
 The Namibian: "Airport Tender Award Falls", 29 March 2017.
 APA News: "Namibia: President Business Associate Arrested for Tax Evasion", 2
February 2017.
 The Namibian: "Calls Mount to Suspend Land Reform Activities", 17 January 2017.
 World Economic Forum: Global Competitiveness Report 2016-2017.
 World Economic Forum: The Global Enabling Trade Report 2016.
 Bertelsmann Foundation: Bertelsmann Transformation Index 2016. 
 US Department of State: Human Rights Practice Report 2016.
 US Department of State: Investment Climate Statement 2016.
 Freedom House: Freedom in the World 2016.
 Oxpeckers: "A Mysterious Dead Hand Driving Namibia's Poaching", 15 September 2016.
 The Namibian: "Police Head of Human Resources Faces Corruption Charges", 27 July
2016.
 The Namibian: "PM Promises Fronting Fight", 12 February 2012.
 World Economic Forum: Global Competitiveness Report 2015-2016.
 Institute for Public Policy Research (IPPR): Special Brie ng Report No. 9, 2015.
 Transparency International: Global Corruption Barometer 2015.
 World Bank: Enterprise Survey Namibia 2014.
 Corruption Watch: "Fronting is Criminal Conduct", 7 May 2012.
 All Africa: 'Ex-NBC sta ers admit TV license corruption', 14 September 2012.
 Polus et al. "On a Slippery Slope: Corruption and the Extractive Industries in Namibia",
2012.

Topics: Sub-Saharan Africa

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