New NEEEB ‘encourages abuse’

Jo-Maré Duddy – Government’s latest attempt at empowerment introduces “vague and draconian legislation where virtually unfettered power and discretion rests in the hands of a yet unnamed minister and commissioner to set standards and criteria for private sector participation in the economy,” the Economic Policy Research Association (EPRA) says.

EPRA has completed a 44-page analysis of the legal and economic impact of the latest version of the New Equitable Economic Empowerment Bill (NEEEB) which will be sent to president Hage Geingob and his ministers.

In its current form, NEEEB is not just “grossly unconstitutional”, but it will also add “significant uncertainty and discourages much needed foreign and domestic investment,” EPRA maintains.

“The legislation presents an opportunity for bad actors in government to execute a wholesale nationalisation of the private sector,” EPRA warns.

The latest version of the bill has passed through cabinet and is with the cabinet committee on legislation, heading to the national assembly, EPRA says. It follows the economic growth summit last year, where Geingob promised that finalising NEEEB would provide policy certainty.

“This latest draft has been a long time coming, promising to incorporate changes after government engaged various stakeholders over the intervening years, many of whom hoped the new draft would ease their apprehension,” EPRA says.

However, the current version includes the power to withhold licenses, permits and authorisations for economic activities, irrespective of whether private entities do business with government or not, EPRA’s report states.

“Penalties for noncompliance include a fine not exceeding N$1 million or imprisonment not exceeding 50 years (or both) for fronting, which is broadly defined and includes any act which undermines the achievement of NEEEB’s objectives,” the association says.

Problematic

There are several problematic areas within the new version of NEEEB, EPRA says.

One of the core definitions in NEEEB, “previously disadvantaged persons”, has been replaced with “empowerment beneficiary”. According to EPRA, the “former definition would apparently lead to the inclusion of persons who are not intended to benefit from this legislation, notably, white women”.

The bill allows for a commissioner to investigate matters and appoint investigators and special investigators, but “there are no real checks or balances in place against the commissioner’s powers, especially where there may be a vested interest”, EPRA points out.

‘Mystery pillars’

The bill provides for eight pillars of economic empowerment. The pillars provide guidelines, but no “strict regulations or standards which must be adhered to.

The bill merely indicates that the “standards of equitable economic empowerment”, which give effect to the act and the pillars, may be published in the Government Gazette by the accountable minister, EPRA says.

“This means the substance of the pillars – such as the now removed 25% ownership clause – remain a mystery,” the report states.

“What these standards will dictate, which private businesses will need to comply with, are now more uncertain than before,” EPRA says.

This uncertainty was one of the fundamental problems after the withdrawal of the previous version of NEEEB, a problem which has not at all been addressed despite the president’s earlier statement; and in fact worsened.”

‘Dangerous’

The bill furthermore gives the unspecified minister the power to demand that any private sector institution must furnish him/her “with any document in its possession or custody or under its control, within the period specified in the directive”.

The wording of this is incredibly broad and worrying, as nowhere does it limit the application of his/her power, EPRA says.

“The order of magnitude of such almost unlimited power should not be vested in government, let alone a single person who is far from infallible.

“This provision also does not denote any oversight, check or balance for such far-reaching power. Frankly, the wording is dangerous and provides ample scope for abuse,” EPRA says.

The bill gives the president the power to determine whether NEEEB will be administered by one minister and ministry, or different provisions are to be administered by different ministers.

Generally, statutes specify which minister/ministry is responsible for a specific piece of legislation, and which other ministers/ministries should be consulted for different provisions,” EPRA says.

“NEEEB perpetuates uncertainty as there is no clear indication of who will be charged with its administration, nor with modalities for administration across various ministers and ministries where co-ordination is required.”

‘Vast power’

“Overall, NEEEB concentrates vast power in just a few hands,” EPRA says.

“It gives individuals in government the ability to co-opt private business in order to enrich select individuals. Furthermore, many of the provisions make use of broad definitions, or provide for unrestrained powers and no oversight, with the only recourse for aggrieved parties through the courts,” the report states.

“Quite simply, these draconic and unspecified provisions not only provide opportunities for abuse, but seem to encourage it,” EPRA says.

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