“Contrasting beautiful Namibia, Namibia our country
Beloved land of savannas.”
Taken from Namibian national anthem
This beautiful country of ours has a landmass of approximately 824 000 km²:
- 114 500 km² (13.9% of total area) are national parks;
- 21 600 km² (2.5%) are restricted “Diamond Areas”;
- 469 100 km² (57.0%) are Title Deeds in freehold land; and
- 218 300 km² (26.5 %) are Non-Title deeds in communal land.
There are approximately 10 900 Title Deed portions outside municipal areas (2006):
- Of this 6 010 are Title Deed farms.
- The 4 890 remaining Title Deeds are plots and small farms.
In total, title deed farms (of more than 3 000 ha each) constitute 61.8% of the agricultural land in Namibia. Smaller title deed plots make up 6.4% of the agricultural land. This last portion consists mainly of smallholdings around towns, in many cases just in residential areas. Agricultural land basically consists of land that is not situated in Municipal/local authority area, not in a settlement area and not owned by the State, as well as land not excluded by a notice from the Minister in the Government Gazette. There are purportedly about 50 state-owned farms that have not been subdivided.
Agriculture in Namibia indeed shapes the backbone of the economy with regard to hunting, tourism and job creation together with the production of primary products.
Extensive livestock farming makes out the bigger part of agricultural activities, as more than 90% of the 687 000 km² of agricultural land (83% of the total surface) are utilized for extensive livestock farming. Veterinary Livestock census and reports in 2006 indicated more than 2 300 000 head of cattle in Namibia. In 2007 Namibia had four export abattoirs for cattle in operation at Windhoek, Okahandja, Oshakati and Katima Mulilo. The sale distribution of Namibian beef reached 72% in the United Kingdom in 2006 and 13% in the Netherlands. Nearly 50% of our country’s job-opportunities are provided by agricultural related activities, with 20% plus in the formal sector, thus being the single most important employment factor within the domestic economy. Unfortunately the meat processing sector is fluctuating with a possible reason the uncertainty amongst the full time productive farmers where numbers are decreasing due to policies and implementations of the agriculture and land reform programmes.
Agricultural land is not only of importance to the economy but also a vital part of the real estate industry.
Guest farms/lodges are also a widespread Namibian development. On guest farms you will still find farming activities/business, but in addition farmers/owners also offer accommodation with full- and half board services. Many farms now have luxury lodges with well equipped kitchens and restaurants, bars, shops, terraces, receptions, swimming pools and various other facilities, which constitute one of the popular real estate holdings of Namibia
Game viewing and sustainable trophy hunting is also of major importance not only for giving value to the game, but also for the economy of our country.
Needless to say, these beautiful lands are not only sought after but general observations are that prices of commercial farmland are expensive, as ownership of farmland is very much linked to wealth in people’s minds. Nevertheless, the realities highlight opportunities for the acquisition of prime real estate with sound tourism potential.
Hunting in Namibia
Hunting is the perfect tool to assist developing nations to achieve a higher level of development. It has the potential to develop into one of the country’s most valuable renewable assets if managed properly through game ranching and utilised sustainably through fee-based trophy hunting.
Forms of wildlife utilisation in Namibia include trophy hunting, own use hunting, shoot and sell, premium hunting, and live game sales. In Namibia, trophy hunting alone generates revenue of about N$300 million per year, representing nearly 2.3% of the Gross Domestic Product (GDP). One of the main attractions of hunting in Namibia is the high standards of ethics obtained by our Hunting Association (NAPHA), who strictly monitors all hunting.
The Agricultural (Commercial) Land Reform Act, 1995 as amended:
The Agricultural industry in Namibia underwent a number of changes since we gained independence in 1990. Besides some changes in subsidy support farming, the government also needed to address land reform and for that purpose adopted the Agricultural (Commercial) Land Reform Act which was passed in 1995.
Practical Implications of Act: Preferment Right of State to Purchase
A key component of the 1995 Act is the requirement that all commercial farmland sold must first be offered to the Government for redistribution through its resettlement programme. This includes the sale/exchange of the land or otherwise disposal of the land for valuable consideration.
In effect it means that no sales agreement / Offer to Purchase is valid until the land:
- Is first offered to the State; and
- if the State does not intend to purchase the farm, they have issued a “Certificate of Waiver” (a Waiver) in respect of the particular land.
A Waiver is only valid for one year. If the sale does not go through and the certificate has lapsed, the procedure needs to be repeated and can only in certain circumstances and specific conditions be renewed.
- What about companies and close corporations?
Until 2002 when the Act was amended by the Agricultural Commercial Land Reform Amendment Act 13 of 2002, land transfers as donations to a close corporation were exempted from the provisions of the Act. Land transfers without sale have mostly been done through close corporations. For example, there was a dramatic increase in the number of corporate registrations between 1994 and 1995 – the year when reporting of sales of commercial farms became mandatory. It has been suggested that the majority of post-1995 transfers categorised as donations could have been structured so as to avoid provisions of the 1995 Act.
As a result there was no sale of land between parties and no need to first offer the land to the Government by seeking a waiver from the Minster of Lands and Resettlement. The short-term effect is that commercial land is removed from the process of redistribution at the point when ownership is transferred. A long-term effect is that once land is owned by a corporation, it is possible to gain control over it by selling or purchasing shares of the corporation. This means that no sale of land as such occurs and any subsequent change of ownership is not liable to provisions of the Act, including provisions against ownership of multiple holdings and ownership of land by non-Namibians.
The Amendment Act of 2002, was introduced to eliminate some of the loopholes in the 1995 Act. Currently the Amendment Act specifically provides that the passing of commercial agricultural land to another person in terms of the controlling interest in a company or close corporation owning agricultural land be deemed as void, unless a certificate of waiver is first obtained from the Minister of Lands and Resettlement.
- What does Controlling Interest mean?
- More than 50% of the issued share capital of a company (51% and more).
- More than 50% of the interest in the close corporation.
- More than half of the voting rights in respect of the issued shares of the company.
- To obtain the power, either directly or indirectly, to appoint or remove the majority of the directors/members of the company/close corporation without the concurrence of any other person.
As in South Africa, farming in Namibia was a direct subsidy by the Government for commercial agriculture purposes. Needless to say, taxation of farmlands never really existed. As part of the current effort to achieve land reform, the government introduced land tax through the amendments to the Agricultural (Commercial) Land Reform Act.
The owner of commercial agricultural land now has to pay a land tax based on the value (known as the Unimproved Site Value) of the land. The value of the land is indicated on the main valuation role and calculated at a rate or progressive rate as may be determined by a notice under section 76 of the Act.
- Farmers Tax
Farmers are taxed in the same manner as individuals or companies with the exception of certain provisions regarding capital expenditure. Certain capital expenditure may be deducted in full in the year in which the expenditure is incurred, limited to the farming taxable income for the year. This includes a deduction of capital expenditure relating to power supply from 1 March 2007 for taxpayers other than individuals. Any excess farming capital expenditure can be carried forward to the next year of assessment. The tax value of livestock may be reduced to nil.
- What about foreigners and agricultural land?
In the case of a natural person, a foreigner refers to someone who is not a Namibian citizen or, in relation to a company, it refers to a company incorporated in any other country but not in Namibia, or if it is incorporated in Namibia, the controlling interest thereof is not held by Namibian citizens. In relation to a closed corporation it refers to the controlling interest that is not being held by Namibian citizens.
The Approach of the Act is twofold, in the sense that it restricts commercial agricultural land acquisition by foreign nationals; and it makes recommendations for those cases where agricultural land was obtained by foreign nationals.
In short, the Act prohibits any Foreign National, without the prior consent of the Minister, to acquire agricultural land through the registration of the transfer of ownership in the Deeds Registry or to enter into an agreement with any other person whereby any right to occupy or possess such land or a portion thereof is conferred upon a foreign national for, in effect, a period which exceeds 10 years.
Currently, the Minister of Lands and Resettlement has initiated a process to amend and consolidate The Agricultural Commercial Land Reform Act, (Act 6 of 1995) and the Agricultural Communal Land Act, (Act No.5 of 2002) into one Land Act. This is done in an attempt to implement the Land Reform Program in Namibia.
Indeed Namibia has a variety of wildlife farms, ranches and rural properties and estates that might interest local and international investors alike. These include game lodges, game farms, game ranches and related tourism and real estate investments.
However, in order to efficiently assist you, please give prior thought to the following before submitting your requirements:
- Size/budget: the extent of your planned investment in terms of the size of the property or in terms of the approximate amount you wish to invest.
- Location: any preferences you have with respect to, region, terrain, habitat, proximity to particular towns or Namibian tourist areas and routes, etc.
- Main activity: what you intend to use the property for, e.g. breeding, hunting, tourism, retirement, holiday, development etc.
- New vs. established: your preferences with respect to development, i.e., are you looking for a going concern with established infrastructure, are you looking for a wildlife area with little in the way of developments, or are you looking for an area which you will turn over to wildlife yourself as a long-term project?
- Management requirements: do you intend to manage the area yourself, are you looking for assistance from a professional lodge management company, or do you wish to own part of an established wildlife area little with no personal involvement in the day-to-day management problems?