International business feasibility of foreign direct investments (FDI) in Namibia.
This MBA dissertation examines the 'Feasibility & Attractiveness of FDI in emerging Namibian market', and the overall impact on the country's international competitiveness as World Trade Organization (WTO) and SADC member. One of the most sensitive areas in international economics is Foreign Direct Investment ( FDI) which need to be considered when Multinational Corporations (MNCs) intend seeking exposure to emerging markets in establishing a subsidiary company in a developing country. Developing countries fear exploitation and inadequate access to foreign capital, technology, marketing & management skills. Many countries such as Indonesia and Russia have accumulated huge foreign indebtedness on which it is difficult to pay even the interest. High indebtedness, high inflation and high unemployment in several countries have resulted in unstable governments exposing foreign firms to the risks of expropriation, nationalization, and limits on profit repatriation. High indebtedness and political instability decrease the value of a county's foreign currency. Foreign firms want hard currency generation with profit repatriation rights, unavailable in many markets. Foreign -government entry requirements and bureaucracy enforce foreign entry regulations on firms with joint ventures with majority share to domestic partner, high number of employed nationals, transfer of technological skills and profit repatriation. Governments often impose high tariffs or resort to invisible trade barriers to protect their industries. The Namibian government can regulate the operations of foreign firms in various ways. Analysis of economic and development factors affecting FDI which negatively or positively influence future investments in the country are examined. Namibia has a good track record of economic and infrastructure development progress. The long-term Development strategy, Vision 2020, aims to achieve developed nation status in both economic and development sectors by the year 2020. Past economic crisis and the exposure to underlying structural weaknesses in financial and corporate sectors, threatened to undermine the country's achievements. Selective capital controls were introduced in an effort to limit currency volatility, additional to the structural reform measures implemented in corporate & financial sectors. One of the key determinants of a sustainable economy is the diversification of its industries. A more balanced economy prevents dependence on any particular sector or number of sectors of the economy and stabilizes economic fluctuations. Diversified industries bring new money into an economy, expand the tax base and provide increased support for infrastructure development projects such as roads, schools, community services and locally dependent small businesses. It is also believed that there is diversified linkages across the sectors of the economy. This type of economy is expected to generate more employment and self-sustaining prerequisite for continued growth in real incomes and employment, which provide a basis for poverty reduction. The research highlights some of the policies and initiatives, which the Namibian government has put in place since Independence to broaden the manufacturing base of the country and to promote export diversification. The aim of this study is to assess whether these efforts to promote diversification have borne the desired results. In other words. has there been a structural shift in the country's production structure during the period under consideration The research design or overall strategic choice is based on a combination of exploratory & descriptive method due to the structured nature of the research problem. Qualitative & quantitative methods are used for data collection based on economic & development factors influencing FDI in the country. The Ministry of Finance recently submitted it's Annual Report, including its annual accounts and reports on its operations and affairs and the general state of the Namibian economy. These Reports and reports accumulated during interviews, as well as data-collection during mail surveys will also be analyzed in an attempt to evaluate Namibia's overall attractiveness for FDI. Exploration: Qualitative methods were employed. I augmented my knowledge of FDI in Namibia by personally interviewing managers and CEOs from government, local and foreign companies and developed questionnaires as a mail survey. Questionnaire design: A self-administered questionnaire secured feedback on FDI in Namibia. Some questions for this instrument were based on the investigation of Central Business District Enterprises and from executive interviews. A comment / suggestion section was included. Pilot Test: I tested the questionnaire with a small sample of CEO's. Revision of the questionnaire was undertaken and it was amended appropriately, after which the final questionnaire was submitted using the mail survey. Evaluation of on-response bias: Random sample of non-respondents. Sample frame was established. Respondents were interviewed telephonically and their responses were used in a statistical comparison of responses _ respondents vs non- respondent samples were taken. In recognition of the critical role SMEs can play in the socio-economic development of the country and economic development of the country and economic diversification, the Government has put in place policies and programmes for the development of SMEs. The main thrust is to increase the rate of growth of existing businesses to ensure the employment of more people. The second thrust is the reduction of business failures while increasing the development of new business formations. The third thrust is the diversification of the activities of the sector includes continuing efforts to improve and empowering environment, including pro-active programme and institutional Supply. More specifically, the assistance programmes for SMEs target the critical areas of access to finance, skills development, marketing, technology transfer, management and institutional support. Such a comprehensive policy framework is expected to enhance the economic role of SMEs not only in terms of their contribution to employment and poverty reduction, but also in terms of contribution to economic diversification. The development and promotion of the SME sector IS an integral part of the Special Industrialisation Programme (SIP), which is designed to render practical support to viable business ideas and plans. The long-term objective of this programme is to promote export-oriented production and where appropriate import substitution. International businesses like multinational companies participate the foreign exchange market to facilitate international trade & investment, to invest spare cash in short-term money market accounts in Namibia & to engage in currency speculation. FOI can make positive contributors to Namibia by supplying the capital, technology and management resources that would otherwise not be available. These endorsements can positively influence the overall economic status of the Namibian people. Benefits of the study can translate into effective marketing of Namibia as WTO and SAOC member and to encourage FOI investor confidence & growth in Namibia. High levels of FOI can translate into positive outputs in terms of economic & growth potential FOI in Namibia, strong global trade and accelerated growth potential in developing African countries. Namibia has recently joined the WTO as member country, does it have a sustainable economy & the infrastructure to attract FOI This research has confidence in the potential for improving economic & development factors that will invite FOI in Namibia. This research desires information on the 'Feasibility & Attractiveness of FOI in amibia and the overall impact on the country's international competitiveness.' As researcher, I intend to identify the economic and development factors affecting FOI in Namibia.