Windhoek-The Namibian Employers’ Federation (NEF) has welcomed the scrapping of the 25 percent clause in the National Equitable Economic Empowerment Policy Framework (NEEEF) that would have seen local companies obliged to sell a quarter of their business to previously disadvantaged individuals.
The NEF secretary general, Tim Parkhouse, yesterday told New Era that the organisation had suggested employee share schemes as a possible replacement of the clause but warned that the details to these types of schemes still needed to be ironed out.
“The 25 percent clause was one of the biggest stumbling blocks to NEEEF as we saw it. As a result of this clause in the proposed legislation many investments had been put on hold. Although this clause has now been removed, many investors will still wait to see the proposals in the draft legislation,” said Parkhouse.
He added that employee share schemes, which had been suggested by the NEF more than a year ago, hold tremendous benefits for employers such as loyalty, commitment and involvement in profitability. “We wholeheartedly support the idea of employee share schemes but the details still need to be worked out such as what happens to the shares once an employee leaves the business,” said Parkhouse.
When asked whether NEEEF should be applicable to previously or currently disadvantaged individuals, Parkhouse noted that the private sector had suggested looking at property ownership as a benchmark and that individuals owning a million dollars of property or more should be excluded from benefitting from NEEEF.
During last week’s State of the Nation Address, President Hage Geingob stated that underlying structural impediments that make it difficult, if not impossible, for many Namibians to meaningfully participate in the economy, should be addressed. “NEEEF is under conversion into a legislative framework (NEEEB). It is a necessary instrument for corrective action. In line with the philosophy of inclusive governance, nationwide consultations were undertaken and we have heard your concerns and considered your proposals. During consultations, a number of key policy and legal issues were highlighted,” said Geingob. He noted that these includes four problematic areas he highlighted at the Cabinet Workshop on NEEEF in February this year. These are definitional issues relating to previously disadvantaged persons and the targeted private sector enterprises; the mandatory nature of the ownership equity and management control pillars; the role of sectoral charters vis-à-vis the empowerment framework; and the need for monitoring and evaluation tools and funding mechanisms to ensure effectiveness.
Outcomes from the NEEEF consultations were presented to Cabinet in February 2018 for deliberation. The Office of the Prime Minister is expected to provide feedback to stakeholders on the Cabinet decision in May and the Bill is scheduled to be tabled in parliament before the end of 2018.
“Let me use this opportunity to put the equity pillar of NEEEF into perspective. The 25 percent equity stake will not translate into broad-based empowerment and is done away with. Professor Roman Grynberg recently made a valid point – most Namibians, especially the previously disadvantaged, do not have enough resources to invest in empowerment transactions, nor are they able to obtain access to funding to participate in such transactions. Some sectors such as mining are particularly capital intensive and come with huge risk during the exploration phase,” Geingob explained.
He continued that the role of government is to create a conducive business environment where owners, whether black or white, who can afford risk capital, can participate in equity transactions under NEEEF.
“Those who want to participate in public procurement will have to do more to be NEEEF compliant. We must strive towards inclusive broad-based empowerment focusing on the plight of farmworkers, domestic workers, women, the youth and all disenfranchised Namibians. Employee share schemes are one of the most effective forms of broad-based empowerment. I encourage such an approach,” said Geingob.