By Dhiladhila Magazine · Issue 13
A striking number can be real, relevant and still not prove what it is used to prove. NIPDB's ratio is a clean example.
Every investment-promotion agency faces the same intellectual problem, and Namibia’s has just supplied a clean example of it. When the board reports a N$174.86 billion pipeline, or about US$10 billion, built on N$700 million of spending, it invites a causal reading: the spending produced the pipeline. The framework beneath that claim deserves examination before the ratio is believed.
The Institute for Public Policy Research, relaying the figures, framed the benefit-cost ratio as impressive while noting the condition attached to it – that the investments came about as a result of the board’s efforts. That conditional is the whole argument. Without it, the ratio is two unrelated numbers placed side by side.
The funnel is a model, not a measurement
The pipeline is a funnel: leads, then final investment decisions, then deployed capital, then operations. As a framework it is useful, because it forces a distinction between interest and commitment that a single total would hide. The N$117.91 billion in leads and the N$2.89 billion operating are different kinds of object, and the funnel at least keeps them apart.
But a funnel describes a shape; it does not establish a cause. That a company appears as a lead in the board’s records does not mean the board generated the interest, any more than a shop’s visitor count proves its advertising worked. The model organises the data honestly and still cannot answer the question the ratio poses.
A funnel sorts investment by stage; it says nothing about who caused it to enter.
The counterfactual that cannot be observed
The core of the attribution problem is the missing counterfactual. To credit the board with the pipeline, one must know what investment would have arrived without it – and that world cannot be observed. Some projects were surely swayed by facilitation; others would have come for Namibia’s minerals, stability or coastline regardless of any agency.
Serious evaluation handles this with comparison groups, timing tests and investor surveys, not with a headline division. Absent those, the N$174.86 billion cannot be read as caused by N$700 million. The rigorous position is agnostic: the spending plausibly helped, the magnitude is unknown, and the ratio is a rhetorical device rather than a finding.
Impact is the difference the agency made, not the total it can stand next to.
What the research actually associates with success
The comparative literature offers a firmer footing. Cross-country work on promotion agencies finds that larger budgets and staff, and better-run investor services and websites, are associated with more foreign investment. Those are input measures, and they suggest a well-resourced, professional agency does move the needle – which is an argument for capacity, not for any particular pipeline total.
That evidence cuts against dismantling a functioning agency even as it undercuts the board’s own arithmetic. If budget and professionalism correlate with results, then a six-year, N$700 million effort that built systems and relationships has probably done real work. The case for the board rests on that research finding, not on the N$174.86 billion it prefers to cite.
The literature backs the agency’s existence, not the ratio it uses to justify it.
Holding two ideas at once
The disciplined conclusion holds two things together. The benefit-cost ratio is not a measurement, because attribution is unproven; and the agency is probably worth keeping, because the factors research links to success are the ones it was building. Rejecting the ratio and defending the institution are not contradictory positions – they follow from the same careful reading.
This is the intellectual value of the episode. It is a live demonstration that a striking number can be real, relevant and unsound as evidence at the same time. The framework that produced it – the funnel – is worth keeping; the causal claim laid on top of it is not.
A number can be true, useful and still not prove what it is used to prove.
For anyone who designs or evaluates public bodies, NIPDB’s pipeline is a case study in the difference between reporting and measuring. The decision it forces is methodological: whether to judge investment promotion by the totals it can display, or to build the counterfactual tests – comparison groups, timing, investor surveys – that alone can show what the spending actually changed.
Sources: The Namibian; NIPDB RIP or NIPDB II? (The Namibian); Effectiveness of Promotion Agencies at Attracting FDI (World Bank)
