Namibia is one of the world’s richest diamond mining geographical areas with an excess of 80 million carats in terms of reserves.
The country’s beneficiation strategy currently under consideration aims to develop secondary economic opportunities from primary mining industries. The argument is the need to provide mining executives and governance structures a concrete legislative and policy framework to turn this comparative advantage into a competitive strategy for the Namibian diamond mining sector which will trickle down to the entire mining sector with commensurate beneficiating regulations.
It is trite that the notion that the markets will fix themselves without state intervention with a regulatory framework for the upstream, downstream and midstream mining activities including value addition to ore products are proponents of market fundamentalism and this argument is that a laissez-faire governance approach is the appropriate model so as not to scare away foreign direct investment.
This argument is contrasted with the more post-modernist approach as adopted by Botswana and South Africa who codified best practices into law using the model from Indonesia.
May we analyse to what extent the provisions of section 58 and 59 of the Namibian Diamond Act 13 of 1999 as amended is commensurate with Section 26 of the South African Mineral And Petroleum Resources Development Act No. 28 Of 2002 as a benchmarked illustration to this argument.
This act prohibits and provides that any mine that sells ore to an offshore provider, the end product manufacturer, that manufacturer has to apply to the government through the minister of mines and minerals to beneficiate to use that uranium ore or diamonds to create the end product with specific interest to mineral prices and profits as recorded on offshore corporate balance sheets taxation.
- What effect will this have on the Namibian mining industry taking on the same legal fervour and tenor to the revenue streams including diamond royalties, resource depletion fees, levies, licensing fees, pay-as-you-earn, corporate taxes, and profit taxes, diamond export tariffs, Value Added Tax (VAT), profits and dividends derived from the mining and sale of Namibia’s 1,6 million carats annually?
- Will it have a derivative exponential dividend growth return for the Namibian government?
- Does this regulation outweigh the fears of scaring away investors?
- How is this fear mitigated by the resource dependence theory and resource curse theory underpinning specialised corporate governance and its application to multinational corporations and subsequent intra-African trade and international trade pedagogy?
The neo-liberal view that market fundamentalism has birthed the growing confidor class, which recycles entitlement and a co-opted black elite that does the bidding for white capital and multinational interest at the expense of socio-economic emancipation of the people which constitutes the prevailing view among scholars germinated from unregulated laissez-faire or free market policies that trace the delimitations of mineral governance.
The minerals policy of Namibia has not considered these views that encapsulate mineral beneficiation and transfer pricing market regulations thus further making arguments for reform within the mining sector.
(By Israel Dollo Hauwanga)
