Imports Still Rule

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By Wezi Tjaronda WINDHOEK As long as production costs remain high in Namibia, the country will continue to import even the least of commodities that it could actually manufacture locally. Despite government’s goal to see a reduction in imports from especially South Africa from 80 percent in 1991 to 60 percent in 2000, Namibia relies even more heavily on imports with the latest figures showing an import dependence of 85 percent. With a high unemployment rate of 36 percent, statistics from recent years indicate that the government spends over N$1.4billion every year on the procurement of goods and services, while at the same time purchasing consumables valued at N$300 million. Total imports including the government’s in 1997 were N$8.4 billion according to the statistics of the Ministry of Trade and Industry. Even though the country has numerous business opportunities, it will have to reach a stage where production costs are low enough to compete with other countries. Economists say the cost of producing a chicken, for instance, in Namibia is twice as high as that of South Africa (N$12), which means retailers prefer importing from South Africa. “These countries have reached economies of scale”, says Martin Mwinga, an economist with First National Bank. While this is also the case with other countries, high input costs such as electricity, transport and selected legislation contribute to Namibia’s high production costs, says the Namibia Manufacturer’s Association (NMA). Others feel that it takes a foreigner to identify an innovative business idea in Namibia, while locals are taking the easy way of retailing. Areas with abundant water sources such as the Caprivi and Kavango Regions, according to the Deputy Director of Small Scale and Informal Industry in the Ministry of Trade and Industry, Ignatius Kamati Mutilitha, could produce cotton, sugar and tomatoes, which would prompt others to put up tomato puree plants and cotton and sugar processing plants if people were enterprising enough. Mutilitha says business people in Namibia should diversify their economic activities in the manufacturing of products, including property development, maintenance services, hospitality and catering, food processing, marketing gardening, tailoring, wood processing, arts and crafts, transport and animal feed. But due to lack of entrepreneurial and management skills, productive technology and institutional competencies have stood in the way of progress, the deputy director adds. Adding to this, Mwinga feels there is lack of entrepreneurs who can produce quality products that can easily compete with imports. But even if Namibia had them, the NMA says the country has such a small market that it would not bring in a lot of money. The only thing that would put the country in a better position would be to manufacture in a way that brings down costs. With an abundance of wood and horns in Namibia, the country can easily manufacture toothpicks and glue, but NMA’s Chief Executive Officer, Hennie Fourie says the businesses would only be viable if the products are exported to, say, Zambia and southern Angola. Namibia has export markets in the Southern African Customs Union with a market of 50 million consumers, the European Union and Chinese markets, which can be accessed duty free and also the AGOA Market where over 6000 products are eligible to enter duty and quota free. Yet the NMA says the manufacturing sector is so underdeveloped and fragile that it remains difficult to compete with other large competitors in SACU, SADC and globally. As a way to improve the competitiveness of Namibian products, the ministry has come up with two initiatives, the Group Marketing and the Sourcing Scheme, which will enable business people to get a wider range of suppliers and production inputs at competitive prices. A consortium of textile companies is spearheading these schemes. Other contributing factors, according to Mwinga, are the direction of Namibia’s economic development dating back to the colonial regime, which created colonial enclave economies within the country with no linkages to each other. For instance, high growth in the fishing sector had no direct impact on the other sectors of the economy, while all raw minerals were exported raw and refining, processing and manufacturing took place in industrialised countries. Due to this factor, among others, colonial rule left two economic sectors, namely modern and traditional economies, with the first being dominated by individualism and producing for international markets, while the second, on which the majority Namibians depended on for survival, was characterized by poverty, low productivity and lack of title deeds to fixed property and also the underutilization of resources, Mwinga added.