Local Manufacturers Bemoan Rising Costs

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By Staff Reporter

Windhoek

Namibian manufacturers have voiced concern about the ever-escalating fuel prices. They say high production costs will have a negative impact on their operations.

“These rising fuel and related energy prices increase input costs for all producers of primary and secondary products. Small to large-scale producers rely on electricity and diesel for production. In a country such as Namibia with long transport distances, the price of fuel is also a major cost factor,” the Namibian Manufacturers Association said in a statement.

The association had earlier noted that the high fuel costs, interest rates, rising inflation and unstable exchange rates are putting a strain on their operations.

“These are making it much more difficult to operate profitably and plan ahead. In addition, we are struggling with higher tax rates, higher electricity costs, etc., than our immediate neighbours who are our main competitors,” the association noted in its last monthly newsletter.

The association said it will continue engaging the Ministry of Trade and Industry and the rest of the private sector to find alternative remedies such as incentive regimes and preferential procurement of local products.

The association said the price of basic commodities such as milk, maize and wheat are rising due to the higher fuel costs required in the production process.

Namibian manufacturers do bulk break, refining and the packaging of maize and wheat. Milk is produced locally and is protected under the infant industry protection by the Ministry of Trade and Industry.

Transport is one of the high input costs for Namibian manufacturers since the raw materials are sourced from South Africa.

“In many cases, Namibia does not produce sufficient quantities of raw materials to satisfy the production and/or manufacturing demands, hence raw materials have to be imported and transported at a cost,” the association said.

After production, the final products are transported country-wide to different markets, giving additional costs to the retail price.

The association singled out the plastics industry which produces plastic bags, plastic bottles and other petroleum-derived packaging materials, saying that the input costs of raw materials rose by more than 60 percent during the past year as a direct result of the escalating oil price.

“Even producers such as small and medium enterprises (SMEs), with potentially very little direct energy and transport costs, are negatively affected as a result of this general increase in the price of basic inputs and accompanying services,” said the NMA.

The increase of costs and the resulting higher prices for end products will also significantly increase the producer and consumer inflation rates in Namibia.

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