Namibiaʼs Investment Scene

Namibia is largely a semi-arid country with a long coastline on the South Atlantic, whose economy is mainly reliant on mineral extractive industries. The country’s natural mineral riches and a small population of about 2.5 million (2019) have made it an upper-middle-income country.

woman-laptopPolitical stability and sound economic management have helped reduce the rate of poverty. However, this has not yet been translated into job creation and extreme socio-economic inequalities persist, despite generous public spending on social programmes by the government.

Namibia has a mobile phone penetration rate of over 100%, with 2.89 million mobile connections in January 2020, a figure equivalent to 115% of the total population. However, internet connectivity lags behind the mobile phone penetration rate. There were 1.28 million internet users in Namibia in January 2020, which is equivalent to 51% of the population. There are, however, efforts being made by mobile service providers to improve mobile and broadband connectivity across the country. However, this continues to be a challenge given the vastness of the country and its low population density.

A Brief History

Given the size of Namibia’s population and market, start-ups often face a challenge in gaining sufficient traction. Support structures for start-ups are in their very early stages, although there are a number of initiatives that exist to support start-ups to succeed.

Over the past few years, a number of incubators and co-working spaces to support start-ups have been founded to various degrees of success. Unfortunately, just like start-ups, these spaces often lack funding to fully support start-ups or to survive. The most successful incubators have been funded by foreign donors, but they will face challenges when their funding is cut.

At present, there have been very few successful Namibian start-ups, but there are a number of promising start-ups who have a good chance of succeeding if they are provided with the right type of support. Apart from providing a physical space to operate from and training to entrepreneurs, start-up incubators provide very little funding for growth. Start-ups struggle to attract early-stage capital from existing structures because of underdeveloped funding markets which are not set up to cater for them as they do not provide patient capital or have the risk appetite to invest in start-ups. As the Namibian start-up ecosystem is still in its infancy, it is still too early to tell if it will be able to produce successful startups which will add value to the Namibian economy.

Much of the start-up activity is focused in the Namibian capital of Windhoek, with very little being done to support start-ups in other regions. Initiatives like Start-Up Namibia, which aims to improve the start-up ecosystem in Namibia, are looking to set up a presence in a number of Namibian towns to support start-ups outside Windhoek.

Realities on the Ground

Financing in Namibia’s private business sector is highly dependent on bank financing. Namibian commercial banks follow orthodox lending practices, meaning that businesses are generally required to provide collateral on a one-for-one basis for loans extended to them, a practice known as secured lending. Banks are also highly regulated entities and the type of financing they can extend to start-ups is limited, given that unsecured lending is very risky, and banks are not allowed to provide equity financing.

Bank finance typically suffers from two major shortcomings when it comes to business finance, especially for start-ups. Firstly, collateral is generally required by the bank as security, which means that businesses are generally required to possess assets before they can borrow to grow their asset base. Secondly, taking out a loan requires making regular payments to the bank, generally from the date at which the loan is granted, to meet the principal and interest obligations of the loan. Interest payments are commonly linked to the prevailing level of interest rates in the economy which can rise and fall in unpredictable ways. This means that an important component of a firm’s costs, i.e., debt repayments, is effectively beyond the firm’s control. Together, the need for collateral and the fixed nature of debt obligations mean that bank finance is often inaccessible or inappropriate for newer businesses, as they need patient capital in this phase of their development.

Namibia also lacks start-up equity investors: one reason for this problem is the lack of local investors in the market, especially for early-stage start-ups that are looking for under N$1 million (US$60k) in investment. This is probably due to a lack of experience of investing at this stage, as well as the relative absence of success stories. Another factor is the lack of institutional investors at this stage. These type of investors often avoid committing capital at this stage due to the risk involved. Therefore, in order for more Namibian start-ups to succeed, more should be done to encourage investment at this stage.

Credit Guarantee Scheme

The Namibian government has recognised the need to provide financing without the burden of collateral to entrepreneurs and has introduced the Credit Guarantee Scheme. The Credit Guarantee Scheme will ensure that SMEs and start-ups with bankable business plans, but that lack collateral, are able to access funding from lending financial institutions. Unfortunately, the scheme will only provide a collateral cover of up to 60% for bankable SMEs and start-ups.

The Bank of Namibia has made a financial contribution of N$70 million (US$4.2m) towards the implementation of the SME Financing Strategy, of which N$50 million (US$3m) will go directly towards the capitalisation of the Credit Grantee Scheme.

Spotlight on Female Founders

One group that is anecdotally overlooked when it comes to fundraising is female founders. Women often need to fight against negative perceptions and stereotypes, in addition to overcoming the many other challenges entrepreneurs face daily. Furthermore, female entrepreneurs may not have access to the networks and subnetworks of potential mentors and partners that are often crucial in helping entrepreneurs to develop, which is something Future Females Namibia is looking to remedy. Future Females Namibia, an initiative that inspires and supports female entrepreneurs with opportunities to connect and collaborate with each other, and access much-needed resources. Additionally, the organisation is looking to promote younger female voices to showcase a new generation of entrepreneurs in Namibia. Female entrepreneurs need to become more comfortable with networking and turning connections into funding or business partners. Visibility is key, as people will invest in female-owned businesses if they have seen them around and have read about their start-ups.

More information:

Investor Scene Growing, but From a Small Base

The proliferation of tech start-ups has led to more business support organisations entering the scene. These range from grant-making bodies such as Start-Up Namibia and the UNDP Impact Investment Facility that provide grant funding towards start-ups, based on set criteria, to incubators and accelerators that run training programmes for entrepreneurs and sometimes give funding at the end of the programme, to early-stage investors and later-stage private equity investors. Examples of early-stage investors include the Namibia Business Angel Network and unlisted investment entities such as EOS Capital, which has a partial allocation towards investing into early-stage start-ups. Later-stage private equity investors are mainly funded by the Government Institutions Pension Fund, as the nature of pension funds is to invest in low-risk assets in order to protect pension fund savings in the long term. Investment requirements into unlisted companies tend to be very strict, limiting the number of companies that receive investments from these funds.

Despite the number of investors entering the market, however, there remains a gap in terms of funding for early-stage start-ups, particularly those looking to raise N$1m (US$60k) and below. The later-stage funders can invest N$4m (US$240k) and upwards, as long as the business matches their criteria and has promise, but they are unable to invest in smaller start-ups. The greater allocation of unlisted investments to later-stage investments, as opposed to early-stage investments, where there is a greater need, is a result of the industry asset allocation being driven by pension funds and insurance legislation that mandates that a certain portion of pension funds and insurance investments be allocated to unlisted investments. As these industries are traditionally risk averse they have tended to invest in later-stage investments.

This has made accelerator and incubator programmes more important, and it has meant a big role for angel investors to play in filling the gap. While the number of such investors is growing, the demand for money still outstrips supply, meaning that investors have more negotiating power and generally get to shop around before they find a start-up in which they want to invest.

The Namibian start-up ecosystem has also struggled to come up with a solution to adequately match start-ups to the right type of investor. That has led some entrepreneurs to chase after investors that may not be a good fit. This can be damaging to a company. The ideal investor should be able to offer a start-up time and access, in addition to money. If an investor has never been active in a start-up market, he or she is unlikely to be able to provide the connections that can make or break a business; and if the investor does not know anything about the market, the advice he or she provides will be limited.

Namibia Business Angel Network

One organisation that is attempting to bridge the equity funding gap for start-ups is the Namibia Business Angel Network (NABAN). NABAN is an angel investor network whose members invest their personal funds in innovative early-stage companies, helping them grow through knowledge, networks and capital.

NABAN aims to champion angel investing into Namibian start-up and early-stage companies. These companies often have great potential but are at too early a stage for venture capital investment, are not generating enough cash flow to be able to repay bank debt and also often need some mentoring. NABAN aims to link those entrepreneurs to investors who have the risk appetite to invest at that stage and can hopefully mentor and assist the investee companies to succeed.

More information:

Universities’ Interest in Entrepreneurship

Technology and IT companies have been around for a long time in Namibia. However, this current wave of start-ups is benefiting from an increased interest in start-ups around the world, as well as better access to information, thanks to the internet and a growing support system (hubs, investors, news coverage, etc.) that did not exist in the past.

One emerging trend is universities interest in entrepreneurship. Two of the leading academic institutions in Namibia offer entrepreneurship programmes. The table below shows these programmes.

Institution Programme Name URL

University of Namibia

Diploma in Entrepreneurship and New Venture Management ence/management-science/undergraduate-qualifications/entrepre- neurship-and-new-venture-management

Namibia University of Science and Technology

Bachelor of Entrepreneurship


Pitching to Impact Investors

Impact investors are funders who seek to effect positive social or environmental change, in addition to making a financial return. They vary widely in their emphasis on impact. Some will screen out investments that have the potential to make a negative impact but will not specifically look to invest in companies that have a stated aim to make a positive impact. The act of investing in Namibia is likely to have direct and indirect positive effects, including job creation.

Others have a much more specific view on what counts as impact and will ask entrepreneurs to report the impact metrics they agree upon. Some will forgo potential financial returns as long as the company’s social and environmental impact is high enough; others will not sacrifice financial returns. Typically, when approaching impact investors, entrepreneurs need to prepare the same documents as they would for other funders.

Additionally, entrepreneurs will need to show how they plan to effect positive social/environmental change. The first task will be to choose which metrics to track. Often, this will be a natural fit – if the company is involved in renewable energy, for example; tracking the number of households affected and the amount of CO2 emissions produced makes sense.

Next, the entrepreneur should plan a results chain, also known as a theory of change. This is a mapping of how the actions the company takes will eventually lead to the desired social impact. Often, making a model in a spreadsheet or visualizing it in another way will be most effective. Each entrepreneur and investor will have different templates they look for.

Additionally, the start-up should integrate impact into its financial model. Just as the start-up makes assumptions about annual customer growth, customer retention rate, etc., it can also estimate how much impact each additional customer/product will bring. Above all, investors want to see how the company’s actions affect the bottom of the pyramid (BOP) — the poorest citizens in a country.

Finally, the start-up should include a separate spreadsheet in its model that makes it clear how it plans to measure the impact it is setting out to achieve. This should link to the start-up’s financial model and its theory of change. Impact metrics should be easily attainable – the start-up should not promise to get in-depth survey responses from each of its customers if it is not sure how each one will respond. Measuring outcomes should not get in the way of running the business, especially early on, so the entrepreneur should be reasonable about what they can show. If investors want to see more impact, they will ask for it.

While these concepts may be foreign to many entrepreneurs, they do matter to a growing number of investors in Namibia. Founders should think carefully before they attempt to position the company as an impact investment. It may be a natural fit for some, but less so for others. If the company is not positioned to make an impact, getting funding from impact investors will create a big burden with regard to reporting and in board meetings. In the long term, it will lead to a breakdown in the relationship with the investor and will likely be a net negative; even if it does result in more funding early on.


Pitching Effectively

Every entrepreneur has a different pitching style, and the start-up’s business model/ maturity will affect what exactly the pitch looks like. Likewise, every investor will ask different questions. However, there are similarities around what investors will want entrepreneurs to cover:

  1. Traction so far. A good idea will typically not be enough for investors to put money into a start-up. They want to see what the start-up has achieved. ‘Has anyone parted with their money for the start-up’s product or service?’ is how one investor put it. If the start-up is not there yet, the founders should get letters of interest from interested businesses, or should show how many active users the business has. Simply put, investors want to see positive signals from the market showing that the start-up’s product or service is in demand and meets a true need.
    - How many units has the start-up sold?
    - How many sign-ups does the start-up have?
  2. What makes the start-up’s team special? Investors often look at the entrepreneur more closely than the businesses the entrepreneur has started. After all, investing in a company means forming a partnership that will last years. If an investor is not sold on the team, they will not invest in the business no matter how much potential the idea has.
    - Why is the start-up’s team uniquely positioned to solve this market problem?
    - What is the team’s experience in this field?
  3. Know the market well: Investors will ask about the market. They will ask why the start-up is focusing on the segment and the potential challenges in the future. Found- ers need to be able to answer their questions knowledgeably, backing up their assertions with hard data. Importantly, investors are looking not only at how well the founders know the market, but also at how well they know how to make money in the market.
    - Has anyone else tried to solve this problem? How is the start-up’s solution different? 
    - What are the challenges the founders foresee in the future, and how will they navigate around them?
  4. The entrepreneur’s track record: If the founders are first-time entrepreneurs, they will not be able to show what their previous companies have done, but they should be able to talk about what they have done since they graduated from school – how they did, what companies they have worked for and what problems they tried to solve. Investors will often do reference checks, so entrepreneurs should keep up with old contacts who may be asked to vouch for them.
    - What has the entrepreneur done in this space already?
    - Does the entrepreneur have people who will vouch for him or her?
  5. The founder’s thinking process is important. Investors understand that as a start- up, projecting growth numbers is difficult; at best, it is an educated guess. While founders should ground their financial projections in reality, the most important thing about the numbers is being able to clearly talk through them and explain the hypotheses.
    - How do the founders justify their growth plans?
    ​​​​​​​- How did the founders evaluate the size of the market?

Advice from a Namibian Private Equity Fund Head

Below is advice given by Josephat Mwatotele (JM) who is the Chief Executive Officer of Ashburton Investments Namibia. Ashburton Investments provides private equity investment management through a fund known as Stimulus Investments Limited (SIL), that is recognised as the forerunner in private equity in Namibia. Stimulus Investment Limited’s portfolio is valued at N$682 million (US$41.1 million) and includes investments in Cymot, Khomas Solar Saver, Namibia Media Holdings, Nashua, Neo Paints, Plastic Packaging and Walvis Bay Stevedoring.

From experience, what are the most common mistakes made by entrepreneurs when they come to seek funding?

  1. A full understanding of the market conditions and market trends – research is not fully done.
  2. Ambitious financial projections with no substantiated key assumptions.
  3. A lack of contingency planning for alternative scenarios.

What are the main considerations you make before investing in a company?

  1. If the company has a competent management team with a skill set relevant to the business.
  2. Willingness of the management team to take on the risk of an equity holder by providing their own capital contribution.
  3. Level of groundwork done (research) and resources to put into the business to get it off the ground from own sources by the current shareholders and management.

What advice would you give to entrepreneurs looking for an investment into their business in order to improve their chances of acquiring funding?

  1. They should take into account the above factors.
  2. Entrepreneurs should have a good understanding of their value proposition and the gaps in the market their product will fill.

What are the red flags you look for before investing into a business?


  1. A lack of passion, drive and commitment from the owners.
  2. A lack of a full understanding of the business/product and marketplace.
  3. Scalability of product/service.
  4. Opportunity to leverage technology.

Which interventions do you believe are necessary in Namibia in order to improve the number and quality of businesses applying for funding at your institution?

  1. Financial management skills/mentorship and market research assistance for entrepreneurs.
  2. Project preparation assistance and packaging for entrepreneurs.