Instead of thinking about how to make the pie bigger, it seems like Namibian politicians are more concerned about how to carve up the pie in new ways. This has expensive consequences.
The Namibian government is determined to complete and implement its National Equitable Economic Empowerment Framework, in short NEEEF, by the end of 2018. It requires all white owned businesses to sell 25% of their business to black people, a concept designed to correct the wrongs of the apartheid years, almost 30 years after gaining independence. It is not a new concept, in fact it has failed to make a difference to millions of poor people in South Africa, where a similar concept called BEE (and its successor BBBEE) was implemented shortly after the awakening of the Rainbow Nation. The reason was simple: few could afford to raise funds to pay for the shares. It made wealthy or connected South Africans extremely wealthy but did little to the average South African.
In deals further down the line, there was an effort made to make it more accessible to average South Africans. All sort of complex financial structures were put in place, whereby the companies would be able to provide vendor finance, where banks issued preference shares to finance deals and where interest was capitalised and hopefully a rising share price would take care of the fact that borrowed money needs to be serviced. The BEE shareholders were “locked in” for a pre-determined number of years, until the borrowed money was paid back, and afterwards they could benefit from some real wealth creation. But just ask any of the shareholders of MTN, Sasol or Resilient Property Fund about their experience, and one quickly realises what a mess it can create if the share price goes South instead of North.
Although it was encouraged that all companies sold some of their shares to black South Africans, it was enforced only at the listed ones. Namibia wants every white business, no matter the size to sell their shares. No matter if it is a big listed company or a small closed corporation. That is insane. There is no liquidity (the ability of in this case black shareholders to find other black investors relatively quickly to sell the shares to at a reasonable price, should you wish to) for small and unlisted companies. I very much doubt that the banks would be prepared to take unlisted shares as security for extending the loans to buy the shares. The only thing certain is that NEEF makes investing in Namibia more expensive, since you now have to generate your return on your investment on 75%, thus requiring a higher return on the investment. Lastly, what ever money is used to buy into the white companies is money that is not available to be deployed elsewhere in the economy. I very much doubt that it would cause more economic growth, the reverse is more likely.
It is also astounding that politicians always assume that they can rectify the results of history. Nowhere in the world has it ever worked. Politicians would be more effective if they come up with policies on how to grow the economy. By growing the economy aggressively, i.e. above 5%, they will make sure that everybody will be better off. It will lift poor out of poverty, it will offer opportunities to young entrepreneurs and it will make everybody wealthier. Taking from Peter to give to Joe will not.