High profit margins and returns tend to sustain longer in Namibia than in some other African regions, Cavan Osborne, Portfolio Manager, Old Mutual Equities at Old Mutual Investment Group, has said.

Osborne and the Old Mutual Equities team just returned from Namibia, saying it is a “good place for investors”.

The country’s economy is relatively small, at around $13bn, compared with South Africa at $350bn and Kenya at $60bn.

“Being off the radar, means that local Namibian companies have very little competition and can deliver high returns. Unlike places like Nigeria, where competition has flooded in, Namibia attracts very little competition,” said Osborne.

He added that another interesting aspect is that since 2010, economic growth has tracked 5% - 6% a year.

“Their strong economic growth has been driven by ongoing developments in mining (mostly uranium and diamonds) as well as developments at the Walvis Bay port, which forms one side of the Trans Kalahari Corridor (a transport route that runs from Namibia, through Botswana and South Africa and on to Maputo in Mozambique),” he added.

Nevertheless, Osborne said the investment opportunities are limited in the country.

From an investment perspective, the Namibian Stock Exchange has around seven locally listed companies and 25 dual-listed companies – mainly South African, but also some resources companies.

“The largest locally listed businesses are the two banks: FNB Namibia and homegrown Bank Windhoek. The local Namibian shares are very illiquid, and the pension fund regulators are effectively increasing the minimum weight to local investments,” he said.

“The result is a very smooth return profile. Local shares were up 80% over the past three years. However, the returns are not as impressive when translated into our measurement currency, the US dollar. The Namibian dollar is linked to the South African rand, which has depreciated by around 40% against the US dollar over the past 36 months,” he added.

As at May 31, 2015, the Old Mutual African Frontiers Fund had 2.7% invested in the country.

The $90.3 fund is an actively managed equity fund that provides exposure to a selection of fast-growing economies in Africa excluding South Africa.

Osborne said the fund has investments in Namibian Breweries and Bidvest Namibia.

“Bidvest Namibia is predominately a fishing business and has been struggling over the past two years as it has been awarded fewer and fewer fishing quotas. Since 2011, it has been “buying in” quotas from the local people, who are now being awarded the quotas, in order to fill its fishing vessels. The other problem is that the cost of buying the quotas back has almost doubled per tonne as competition has increased,” he said.

“Namibia Breweries, on the other hand, makes good returns in Namibia, but continues to struggle in South Africa where it is competing in the backyard of global giant, SABMiller,” he added.