International Journal of Applied Research
Vol. 4, Issue 5, Part E (2018)
Determinants of foreign direct investments in Namibia
The main purpose of the study was to investigate the main determinants of foreign direct investment (FDI) in Namibia. Foreign direct investment enterprise is an institutional unit in the financial or non-financial corporate sectors of the economy in which a non-resident investor owns 10 per cent or more of the voting power of an incorporated enterprise or has the equivalent ownership in an enterprise operating under another legal structure. The study focused on the performance of Namibia as a whole relative to the global flows. In this study, evidence has been presented showing the inequitable share of the FDI flows that the SADC region in general and specifically Namibia attracts. The challenge is to find the best policies that will enhance the country’s attractiveness to investors as it has deteriorated in the past years. To address this research gap and add on to the limited literature in this research area, an assessment is going to be carried out in order main determinants of foreign direct investment in Namibia. In this research, time series data for the period from 1995 to 2015 was utilized. To avoid inconsistence in prices, constant prices were used to adjust for price changes. FDI data was obtained from the International Monetary Fund through the GlobaleEconomy.com website. Econometrics time series data was then logged so that it was made stationery and spurious regression made uncertain.
This study results showed that taxation, investment freedom, exchange rates regime and the rule of law influences foreign direct investments. From the model used, it can be said that taxation is of importance when making policies that encourage investments from abroad. High taxation rates discourage foreign investments. The negative rule of law obtained, indicates that the laws in Namibia are not favourable or conducive to attract investments. Whilst the government’s move to fix exchange rates is commendable, the rule of law should be improved and maintained. Investors although they want more profits, they also want their investments to be secured to make sure that they don’t lose their property. Only laws can be protect foreign investors. It is highly commendable that the government of Namibia revise their laws and enforce them without favour.
How to cite this article:
Chucknorris Garikayi Madamombe. Determinants of foreign direct investments in Namibia. Int J Appl Res 2018;4(5):315-322.