THE RECENT investment conference held at a hotel in Windhoek from 8-9 November is being widely hailed as a "resounding success," but also as "one of a kind".
Under the theme "Promoting Investment for Inclusive Growth and Industrialisation," this was Namibia's first international investment conference held on home soil since independence.
Government officials, pundits, enthusiasts, and local media houses have all alluded to the big attendance of investors and business people from around the world and Namibia as a success.
Some of the investments netted by Namibia, as reported in The Namibian, include the steel manufacturing plant, which is worth an estimated US$250 million, to be set up at Otavi; eleven investment commitments, including two signed agreements and one joint venture pact, were also scored.
Other commitments for further "in-depth discussions and negotiations" are also on the table. We are furthermore told that the international conference attendees took Namibia back to their home countries as future references for investments, to paraphrase minister Tom Alweendo.
Only the crass would denounce such a seemingly massive success, but do the songs of success stand up to scrutiny? It was perhaps successful in terms of the conference happening, but not in terms of the benefits and positive outcomes for poverty alleviation.
Therefore, claims that this conference was a huge success not only need auditing because of the potential self-bias reporting and absence of empirical evidence, but also miss the urgent strategic moment of this conference.
Did the conference help us, as a nation, realise our own local strengths, resources and power that we have in promoting investment and inclusive growth? Did the conference legitimate or de-legitimate our own local efforts/processes in promoting economic growth in this country? Did it reinforce our collective resolve towards addressing poverty and income inequality in the sense that foreign direct investment (FDI) would trickle down to the bottom?
Thus, for the purpose of erring on the side of caution, I say let's not celebrate prematurely that the conference was a resounding success. Perhaps the wise thing to do now is for us to pop the champagne, but we should not drink all the champagne.
FDI is not a new thing. Nor is Namibia the first country in Africa or the world to host an international investment conference. Results about the benefits and impacts of foreign direct investment from other countries is a mixed bag and difficult to measure with accuracy and certainty.
The benefits of FDI to a host country may include the support of human capital formation; the provision of new technologies; the promotion of a competitive business environment; facilitation of trade integration; and resource transfer and other exchanges of knowledge/skills/expertise.
But hold your breath. An astute economist would tell you that economic events do not occur in a linear fashion. There are always lags and uncertainties that may sway the forecasted economic outcomes differently than anticipated.
What we know, from old-century research evidence, is that multinational companies and foreign investors tend to transfer the majority of the capital - in the form of profits - back to their home countries. They also tend not to transfer skills, and instead put their own people in key strategic places because they are usually sceptical about the locals' abilities and acumen to manage their businesses.
Relying on foreign investors for economic growth may actually carry some risks because foreign investment is not permanent. Foreign investors can pack and leave anytime they want, especially when the condition that attracted them to invest in a host country changes.
Other research evidence also suggests that if not done properly, FDI may kill local businesses, especially start-ups. With its capital, new technologies and products, a foreign investment company has more comparative advantages over local start-ups and entrepreneurial/businesses, a process which may force local businesses to lower their prices.
Perhaps, we also do not want a situation where the country's key and strategic resources, which I saw were paraded as key areas for foreign investment, in the hands of foreign investors. Not only may that weaken our country's comparative advantage, but could present security risks too.
But more importantly is the knowledge that foreign investment also comes with the risk of potentially damaging the environment which sustains people and communities' livelihoods. Villages may be dispossessed of their land. Food security may be threatened; traditional values or cultures may be altered negatively, and the stability of the climate may be disturbed.
What we need to determine first is whether engaging foreign investors provides us with maximum benefits, than go by the number of attendees or verbal investment promises.
- Ndumba J Kamwanyah is deputy director at the University of Namibia's Centre for Professional Development and Teaching and Learning Improvement. He writes in his personal capacity.