Proposed changes to how Namibia funds its road accident compensation system could reshape the country’s automotive landscape, influencing everything from consumer choice and electric vehicle adoption to cross-border trade.
The Motor Vehicle Accident (MVA) Fund is considering the introduction of new levies on all registered vehicles—including, for the first time, electric vehicles (EVs)—as it seeks to address a growing mismatch between its revenue sources and escalating costs. Currently reliant on a fuel levy, the Fund is seeing income stagnate as vehicles become more efficient and EVs, which use no petrol, begin to enter the market.
While the proposed levies—estimated between N$5 and N$50 per vehicle—may appear minor, they signal a fundamental policy shift from a fuel-based to a vehicle-based charging model. This move aims to create a fairer system where all road users contribute to the costs of accidents, trauma care, and infrastructure wear.
However, the plan has sparked debate among industry analysts and stakeholders. A key concern is the potential regressive impact on lower-income buyers. For households already stretching budgets to afford a vehicle, any additional cost could be significant. This is particularly true for the growing segment of buyers turning to affordable Chinese brands like Jetour, Omoda, and JAC, which have gained market share by offering value and practicality.
“These brands have filled a critical affordability gap,” notes an industry report from Simonis Storm Securities. “Any added cost, no matter how marginal, could dull that competitive edge in a highly price-sensitive market.”
A more contentious element is the inclusion of electric vehicles in the levy framework. This puts Namibia’s climate goals and its automotive future in a delicate balancing act. The nation has committed to reducing transport emissions and promoting green mobility. Yet, placing a new fee on EVs—which currently constitute less than 1% of the national fleet—without offering counterbal incentives like import duty reductions or charging subsidies, risks stifling adoption before it even begins.
“Without complementary incentives, levying EVs sends a mixed signal to consumers and investors,” the report suggests. As neighbouring countries like South Africa introduce pro-EV policies to stimulate their markets, Namibia must be cautious not to position itself as a laggard, potentially missing out on the first-mover advantages in a sector poised for exponential growth.
The proposed levy on foreign-registered vehicles, aimed primarily at cross-border transporters from South Africa, Zambia, and Angola, could benefit local dealerships by encouraging local registration and financing. However, its success hinges on efficient enforcement and clear communication to avoid compliance issues at border points.
Strategically, this policy review opens a spectrum of risks and opportunities. For dealerships, it will become essential to reassess pricing models, perhaps by offering transparent, all-inclusive packages that soften the blow of added costs. Financial institutions have a chance to innovate with more flexible loan products, including green vehicle financing, to keep mobility affordable.
For the government and the MVA Fund, the challenge is to design a system that is not only revenue-positive but also behaviourally smart. A one-size-fits-all levy may be simple to administer, but a tiered system—based on a vehicle’s age, emissions, or safety rating—could more effectively encourage safer, cleaner choices while fairly distributing the cost burden.
Ultimately, these proposed levies are more than a simple tax change; they are a test of policy coherence. Success will depend on careful calibration, clear communication, and the integration of these charges into a broader, forward-looking strategy for sustainable transport. If implemented thoughtfully, this could pave the way for a more equitable and resilient vehicle market in Namibia. If not, it risks dampening growth, burdening those least able to pay, and slowing the transition to a greener automotive future.