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Cablegate: Namibia: 2009 Agoa Eligibility Review Submission

VZCZCXRO9871
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHWD #0374/01 2871230
ZNR UUUUU ZZH
R 141230Z OCT 09
FM AMEMBASSY WINDHOEK
TO RUEHC/SECSTATE WASHDC 0809
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

UNCLAS SECTION 01 OF 06 WINDHOEK 000374

SIPDIS
SENSITIVE

STATE PLEASE PASS TO AF/S AND AF/EPS Gabrielle Mallory
USTR FOR BILL JACKSON AND CONSTANCE HAMILTON
DEPT OF COMMERCE FOR J.DIEMOND AND KEVIN BOYD
DEPT OF TREASURY FOR ANTHONY IERONIMO

E.O. 12958: N/A
TAGS: EAGR EAID ECON ENRG ETRD PHUM WA
SUBJECT: NAMIBIA: 2009 AGOA ELIGIBILITY REVIEW SUBMISSION

REF: A. STATE 97769

1. (SBU) Summary: This cable is the AGOA Eligibility Review
submission for Namibia. Responses are keyed to paragraph 3 of
reftel. End Summary.

Country: NAMIBIA
Current AGOA Status: Eligible

3. (SBU) Country Background Summary:

Namibia has a population of approximately 2.1 million (projected).
GNI in 2008 was $8.88 billion; 2008 GNI per capita was $4,200.
Namibia's formal economy produces most of its wealth, although
traditional subsistence agriculture (mainly in the north) supports
most of its labor force. Independent since 1990, Namibia maintains
a functioning democracy based on a modern, liberal constitution. In
November 2004, the nation elected then Minister of Lands,
Resettlement and Rehabilitation Hifikepunye Pohamba as the new
President, succeeding the country's founding father and first
democratically elected President, Sam Nujoma. This year's
Presidential and National Assembly elections are scheduled for
November 28-29. Namibia's greatest challenges are to bring the
majority of Namibians disadvantaged by apartheid into the economic
mainstream while addressing the challenge of HIV/AIDS. In July
2008, the Namibian government and Millennium Challenge Corporation
(MCC) signed a $ 304 million grant agreement. The National Assembly
ratified the compact in November 2008, and it entered into force in
September 2009. The five-year compact will help strengthen access
to and quality of Namibia's education and training sector, increase
productivity of farm enterprises in communal rural areas and promote
growth in Namibia's tourism industry. Namibia has a developed
infrastructure. Over half of the country's export earnings come
from diamonds and other mineral products including copper, zinc, and
uranium. Namibia is also a significant exporter of fish and fish
products. Namibia's excellent conservation policies ensure the
protection of its fragile ecosystem and abundant wildlife.

4. (SBU) Section I. Market Based Economy/ Elimination of Trade
Barriers

A. Major Strengths Identified

- The economy is modern and market-based, incorporating a
rules-based trading system.

- The Foreign Investment Act guarantees foreign investors national
treatment, fair compensation in the event of expropriation,
international arbitration of disputes between investors and the
Government, the right to remit profits, and access to foreign
exchange.

- The legal system protects and facilitates acquisition and
disposition of property rights.

- Registration of patents, trademarks and designs is administered by
the Registrar of Companies, Patents and Trademarks.

- The Namibian Society for Composers and Authors of Music (NASCAM)
established in 1994 in terms of the Copyright and Neighboring Rights
Protection Act administers and protects musical works.

- A second copyright organization, known as the Namibian
Reproduction Rights Organization (NAMRRO) was launched on 27 March
2008. NAMRRO represents the rights of authors and publishers of
literary, artistic and dramatic works.

- The transportation infrastructure is well developed and there is a
favorable business climate.

- Namibia was ranked 66 out of 183 countries in the 2010 World Bank
Group's Doing Business Report. Namibia ranked fourth amongst
Sub-Saharan African countries.

- Namibia has responsible economic policies, institutional capacity,
and sound banking and financial management practices.

- As a member of the Southern African Customs Union (SACU) and host
of the SACU Secretariat, Namibia is an enthusiastic participant in
the implementation of the U.S.-SACU Trade, Investment and
Development Cooperation Agreement (TIDCA) which was signed in July
2008.

- The government is working to improve service delivery and
efficiency through decentralizing sector management.


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- The Government has initiated projects to increase the supply of
electricity in response to increased demand in Namibia and the
sub-region.

B. Major Issues/Problems Identified

- Income distribution inequalities in Namibia, as measured by the
Gini Coefficient, are among the worst in the world. Namibia's Gini
Coefficient is 0.6. Aggregated macroeconomic statistics mask huge
disparities in wealth and income between different populations.

- Although the government has studied various options for
privatization of parastatals and has frequently stated its
commitment to instituting provisions for private investment in these
organizations, privatization remains slow with almost no active
progress.

- The government retains ownership of various assets, including
power, telecommunications, transport, and water utilities. Many
operate as commercialized entities, operating as businesses
independently of subsidies from the national budget. Power and
telecommunications parastatals are among Namibia's most profitable
companies and pay dividends to the government. There are some
parastatals, however, that are draining subsidies from the national
budget, such as Air Namibia. Only a limited number of the 41
recognized parastatals produce annual reports on a regular basis.

- Persistent levels of poverty, unemployment, and HIV/AIDS remain
the most challenging issues for Namibia. Namibia's adult HIV
prevalence rate is approximately 15 percent, according to UNAIDS.

- There is a serious shortage of skilled and specialized workers,
especially in the science, engineering and health sectors.

- While Namibia still ranks high amongst Sub-Saharan African
countries in the World Bank Group's Doing Business Report, it
slipped on 9 of 10 sub-indicators in the report and dropped 12
places overall from 54 to 66 out of 183. According to the report,
Namibia ranks 151 out of 183 countries for Trading Across Borders.
Import/Export documentation requirements are a leading factor in why
Namibia lags behind even its regional peers.

- There are often long delays in the processing of work permit
applications.

- Increases in demand for electricity and water that may outstrip
supply in the short-term which could jeopardize development
projects.

- While inflation still remains moderately high (above 7 percent),
2009 saw a sharp decrease from 2008 levels which eclipsed 12
percent. This decrease was triggered mainly by the global economic
slowdown and measures introduced by the central bank to control
inflation (primarily the reduction of the REPO rate).

- Approximately 40 percent of the Namibian government's revenues are
derived from the SACU revenue pool. A steep drop in SACU revenues
in 2009 has widened the Namibian government's budget deficit.

5. (SBU) Section: II. Political Reforms/Rule of
Law/Anti-Corruption

A. Major Strengths Identified

- Freedom House's Freedom in the World index ranks Namibia as "Free"
(Ranking: 2).

- Several elections since independence have been accepted
domestically and by the international community as reflecting the
will of the people.

- The constitution provides for an independent judiciary and the
government respects this in practice.

- Rights to due process, a fair trial, and equal protection under
the law are well established, although the right to a fair trial is
limited somewhat in practice by long delays in hearing cases in the
regular courts and the uneven application of constitutional
protections in the traditional system.

- Anti corruption legislation and institutions have been established
to combat corruption. An Anti-Corruption Commission, launched in
January 2006, investigates instances of corruptions and refers them
to the Office of the Prosecutor General for prosecution. Other
anti-corruption institutions include the Office of the Ombudsman,
the State-Owned Enterprises Governance Council, and the Office of

WINDHOEK 00000374 003 OF 006


the Auditor General.

- Opposition parties are able to register and participate in
elections.

B. Major Issues/Problems Identified

- A large court backlog, lengthy pretrial detention, and lengthy
delays during trials remain problems.

- The law prohibits corruption, and the government has shown
improvement in addressing the problem, but officials continued to
engage in corrupt practices. The World Bank's Worldwide Governance
Indicators reflected that corruption was a problem.

- In May, the government implemented the Financial Intelligence Act
and the Prevention of Organized Crime Act, paving the way for
authorities to monitor and prosecute money laundering activities and
organized crime, as well as impose forfeiture measures on the
proceeds of crime. The new laws are expected to bolster efforts to
combat money laundering and its predicate financial crimes, such as
tax evasion, false accounting, and corruption.
- Over the past three years Namibia has slipped to 61 out of the 180
countries on Transparency International's Corruption Perception
Index. In 2006, Namibia was 55, and in 2007 it ranked 57th.

- Media practitioners, civil society, political commentators and
other persons criticized the passing of a new Communications Bill,
which contains a clause that allows the intelligence services to
intercept phone calls and short message service (SMS), as well as to
monitor e-mails and internet usage with authorization from any
magistrate. Many had argued that interception should only be
authorized by the judge president of the High Court. Opponents
called the law an invasion of privacy and a violation of the right
to freedom of expression.

- Although to a lesser extent than 2008, opposition political
parties still faced harassment when organizing in some areas of the
country by ruling party supporters.

6. (SBU) Section III. Poverty Reduction

A. Major Strengths Identified

- The government recognizes the importance of economic growth to
poverty reduction and actively encourages inward foreign investment.
Government officials have praised AGOA for creating opportunities
for value-added manufacturing.

- In July 2008, the government and MCC signed a $304.5 million
poverty reduction grant. The Namibian National Assembly ratified
the compact in November 2008, and it entered into force in September
2009. The MCA compact will support the education and training
sector, increase productivity of farm enterprises in communal rural
areas and promote growth in Namibia's tourism industry.

- The government continues to encourage black economic empowerment
(BEE) partnerships, many in joint ventures with foreign investors,
to increase economic participation of historically disadvantaged
Namibians. The government has been criticized, however, for its
failure to implement a formal BEE policy.

- Namibia has adopted a fiscally prudent and balanced macroeconomic
approach to addressing poverty.

- In the 2009/2010 budgetary year, 9.6 percent of total expenditures
were for the health and social services sector and 21.5 percent were
for education.

- The 2009/2010 budget also made provision for an increase in the
number receiving social grants.

- Growth and poverty reduction are central to the government's goals
and have been included in all development policy documentation,
including the government's long-term development plan, Vision 2030.

- The government's Drought Relief Program continues to provide free
food rations to a considerable number of people.

- The government recognizes the needs of the micro-enterprise sector
and is addressing them through policy and legislation to enable more
coordinated service delivery and access to credit needed by the
large section of the population attempting to enter the formal
sector.

- In August, the Bank of Namibia granted a provisional banking

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license to FIDES Bank Namibia, the first micro-finance bank in the
history of Namibia.

- In 2007, the government negotiated a deal with De Beers which will
ensure supply of Namibian rough diamonds to local diamond cutting
and polishing factories. This has resulted in a major boost for the
diamond cutting and polishing sector.

- The government continues to support the state-owned national
energy utility's (Nampower) infrastructural development for power
generation to ensure security of electricity supply.

- The government allocated substantial resources for the upgrade of
airport, roads and railway facilities over the medium term.

B. Major Issues/Problems Identified

- A 2004 Namibia Labor Force Survey determined that chronic
unemployment exceeds 36 percent. The rate of female unemployment is
higher than that of men.

- After becoming AGOA eligible in 2000, Namibia attracted over $300
million in investment and created nearly ten thousand new jobs in
the textile and apparel industry. In May 2008, the Malaysian
company Ramatex permanently closed its operations, claiming
operational losses.

- Some of the factors that contributed to the closure of two apparel
companies include low worker productivity, ongoing labor disputes,
transportation delays, strikes, poor public relations, and
environmental issues.

- HIV/AIDS threatens to undermine economic growth and social
cohesion. The government recognizes the severity of the problem,
and has launched serious counter programs, many in close
coordination with USG agencies. Namibia is one of 15 focus
countries benefiting under the President's Emergency Plan for AIDS
Relief.

- Although the government still lacks an official BEE policy, BEE
schemes in general have come under fire for benefiting a select few
elites rather than serving as a tool for empowerment.

7. (SBU) Section IV. Workers' Rights/Child Labor/Human Rights

A. Major Strengths Identified

- The Constitution provides for freedom of association, including
freedom to form and join trade unions and the government respects
that right in practice.

- Internationally recognized worker rights are protected and
respected in the 2007 Labor Act. Forced or bonded labor by adults
and children is prohibited.

- The government is working with the ILO to harmonize the work of
its Labor Law Courts with other similar courts in the southern
Africa region.

- Namibia has ratified 10 of the International Labor Conventions
including Convention 182 on the Worst Forms of Child Labor.

- The government began to implement recommendations emanating from
the National Initiative to Eliminate Exploitative Forms of Child
Labor.

- The government generally respects the rights of its citizens,
although there were problems in several areas.

- The government has made progress in improving prison conditions,
although conditions at police detention centers continue to raise
serious concerns.

- The legislature has passed laws requiring more stringent penalties
for rape and child abuse.

- In recent years, there has been significant improvement in the
attention paid to women's issues and the rights of the disabled.

- The Prevention of Organized Crime Act enacted in November 2004,
which entered into force in 2009, specifically prohibits trafficking
in persons. The Government conducted a nationwide baseline study to
assess the extent of the problem.

- A new Labor Act of 2007 will come into force on November 1, 2008,
It includes conciliation and arbitration provisions, and fixed

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timelines for reaching settlements.

B. Major Issues/Problems Identified

- While workers have the right to form and join trade unions, most
unions are affiliated with the ruling party.

- There are a small number of independent unions.

- The right to strike is limited to disputes involving specific
workers' interests (e.g., pay raises). Unions cannot legally strike
on behalf of terminated employees.

- Labor disputes have taken up to three years to resolve.
Knowledgeable sources within the employment and labor community
estimate there are more than 800 cases awaiting resolution in Labor
District Courts.

- No statutory minimum wage law exists, although three labor sectors
(construction, security, farm workers) have negotiated minimum wage
agreements..

- Child labor continues to be problem, particularly on communal
farms and in the informal sector.

- Government enforcement of labor provisions can be inconsistent.
Some foreign companies have been publicly criticized for engaging in
unfair competition by not following safety and compensation
standards, especially in the construction sector.

- There have been some reported instances of security forces
assaulting or otherwise mistreating citizens during arrest or in
detention.

- Sub-standard conditions and overcrowding in prisons and police
detention centers remain challenges.

- Racial and ethnic discrimination, especially in remote rural areas
where indigenous people often are unaware of their rights,
continues.

- Violence against women and children, including rape and child
abuse, continues to be a problem, as well as discrimination against
women.

- A baseline assessment conducted by the government confirmed that
Namibia is a source and destination country for trafficked children;
however, the magnitude of this problem is unknown. Press reports and
civil society organizations indicate that child prostitution is not
uncommon.

8. (SBU) Section V. International Terrorism/U.S. National Security

A. Major Strengths Identified

- Although the Parliament has not yet enacted an anti-terrorism bill
(one has been circulating since 2003), the Namibian Government has
been receptive to U.S. counter-terrorism concerns and has pledged
cooperation on intelligence sharing, including the exchange of
information on suspicious financial flows. The Namibian Government
regularly acts on additions to the UN 1267 Sanctions Committee
list.

- Pursuant to UNSCR 1373, the Namibian Government has taken certain
steps to prevent and suppress terrorism, including signing the
International Convention for the Suppression of the Financing of
Terrorism in November 2001, and becoming party to the 1979
Convention on the Physical Protection of Nuclear Material in March
2002 and the Convention for the Suppression of Unlawful Acts against
the Safety of Maritime Navigation in July 2004.

- There are no legal impediments to the prosecution of terrorists in
Namibia.

- - The Financial Intelligence Act (FIA) of 2007 (developed in
consultation with U.S. Traesury, the IMF and UN) came into force in
April. The legislation is administered through the newly
established Financial Intelligence Centre (FIC) at the Bank of
Namibia. The center has anti-terrorist financing responsibilities.
The U.S. Department of Treasury provided technical assistance to
help establish the center and to train law enforcement officials in
financial investigation techniques.

B. Major Issues/Problems Identified

- Progress in implementing UNSCR 1373 has been slow; important

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legislation is still pending. Although Namibia has drafted a
Combatting of Terrorist Activities Bill which will criminalize
terrorist financing, that is, the raising, providing, or use of
funds, whether from a legal or illegal source, for terrorist
purposes. The Bill does not, however, provide for the liability
for legal persons which are used to facilitate terrorist financing
or terrorist activities. Furthermore, there is no legislative,
regulatory or institutional framework for freezing and seizing
terrorist funds or other
assets of persons. Namibia has also made little progress in becoming
party to the 12 international conventions and protocols relating to
terrorism. To date, Namibia has signed only three of the 12 and
acceded to two.

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