Monday, 6 June 2011

Namibian Competition Commission and Wal-Mart

While South Africa prepares to welcome global retailer Wal-Mart with open arms, the Namibian Competition Commission (NCC) is trying to impose conditions on the entry of the multinational into the country. The NCC approved the merger that would make Wal-Mart a major player in Namibia in February, but imposed certain conditions. One of these conditions, was "local participation 'in order to promote a greater spread of ownership, in particular to increase ownership stakes of historically disadvantaged person'". The High Court, however, struck this down on the grounds that Namibia law prevents a foreign investor from being bound by conditions such as this. The NCC is now challenging this ruling. 

The entry of Wal-Mart into the Southern African market has proved controversial. In South Africa, labour unions have expressed dismay at the limited conditions imposed on the country. Nambia, however, works within a different legal framework, including restrictions on the restrictions that can be places on foreign investment. In this case, 
Judge Dave Smuts in his judged found the above condition invalid because it is in conflict with the Foreign Investment Act, which states that no foreign national engaged in business activity in Namibia may be required to provide for the participation of Government or any Namibian as shareholder or partner in such business.
This is a very clear contrast with conditions imposed on businesses in other countries in the region. In Zimbabwe, for example, there is a concerted push for majority local ownership. I wonder what the success of each country is in attracting foreign investment, relative to the legal framework?

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