By Charles Tjatindi
Despite misgivings in some quarters, a recent report on the progress of Namibia’s Export Processing zone, EPZ, found that the EPZ regime has had a positive impact on the local economy.
Besides the obvious new jobs, the Offshore Development Company (ODC) reports that the impact of the regime has been in the form of inflows of productive capital and technology, transfer of productive skills and the diversification of the economy, amongst others.
The generous set of incentives offered under the EPZ has enhanced the attractiveness of Namibia as an investment location. This has resulted in increased inflow of investments, with subsequent job creation locally being a direct result of such investments.
The report further states that EPZ enterprises have introduced new manufacturing activities and production technologies into the local economy. Until the arrival of projects like Namibia Press & Tools and Namzinc, activities such as automotive parts manufacturing and zinc refinery were non-existent in the country.
In addition, the emerging diamond cutting and polishing industry has introduced new skills and know-how and will create further spin-offs in the local economy. This, the report notes, will present an opportunity for the development of the local jewellery industry.
In performance of its catalytic role, the Namibian Government has proactively negotiated and secured regional and international export markets. This has been particularly significant in the context of the highly limited domestic market.
There however have been little or no significant private sector activities to capitalize on the duty and quota-free market access provided through the Africa Growth and Opportunity Act (AGOA), the Economic Partnership Agreement (EPA), and other similar trade arrangements, notes the ODC report.
Undoubtedly, Namibia made practical inroads into the lucrative USA and EU markets mainly through exports of garments, automotive parts and other products manufactured by EPZ enterprises, which in turn enhanced the country’s export potential and competitiveness. EPZ manufacturing activities have led to the development of new infrastructure and growth, most notably in the service sector.
According to the report, the transport, banking, construction, utility, IT, security and other services sectors have been the main beneficiaries.
In 2004, EPZ enterprises were reported to have consumed goods and services from local suppliers worth more than N$300 million.
The provision of the EPZ Act that permits EPZ enterprises to locate at any location of choice has served as an incentive and catalyst for regional development.
A case in point is the launch of the EPZ initiative at Oshikango, which attracted investments and spurred the local development of this formerly less developed border settlement, transforming it into an important portal for export and commercial activities.
Since then, local and foreign investors have flocked to the area and are cashing in on the easy access to the lucrative Angolan market.
The activities of Namzinc (Skorpion Zinc) have had a similar positive effect on Rosh Pinah and surrounding areas in the southern part of the country. EPZ investments in the mining sector have also enhanced local value addition to mineral resources before being exported, and thereby contributing to the reversal of the traditional reliance on exports of unprocessed resources.
Amongst others, EPZ status has been granted to the copper refining component of the Tsumeb-based Ongopolo Mining & Processing and the zinc refinery at the N$3.2 billion Anglo-American Skorpion zinc mine at Rosh Pinah.
Since the re-integration of Walvis Bay into the Namibian fold in 1994, the harbour town has become a key engine of Namibia’s economic growth, both as a port and home to Namibia’s flourishing fishing industry.
Namibia has adopted an EPZ concept slightly different from the restrictive traditional fenced-in zones. The Namibian EPZ law provides for the establishment of zones as well as single-factory EPZ enterprises.
The former entails the designation of industrial areas for purposes of providing serviced industrial land for licensed EPZ enterprises to set up and operate from. Such zones are supposed to be clearly demarcated but not necessarily fenced off.