The United Nations Economic Commission for Africa (UNECA) has informed the foreign policy conference that increased trade and investment flows between Namibia, its African neighbours and other external partners should be the central objective of development strategy and foreign policy.
In the presentation paper, “Towards robust trade and investment policies,” the UN commission highlighted the need for talks on greater regional trade integration through continental and tripartite free trade areas in both goods and services, and also the need to boost exports in agriculture and fisheries.
The paper whose lead author is David Luke, the coordinator at the African trade policy centre, suggests Namibia should support ambitious outcomes from the continental and tripartite free trade areas “for certain goods and services that represent Namibia’s ‘offensive interests’ in these negotiations”.
Namibia should “improve the ease with which goods can transit through Namibia to boost its role as a transit hub for the sub-region,” and should bolster its growth through greater regional integration.
“Given that South Africa is the second destination for Namibia’s transit trade (after Switzerland), this would suggest that it may be of interest for Namibia to investigate whether it can potentially expand its role in transiting goods to South Africa,” further recommends the UN economic commission’s paper.
Namibia’s exports to South Africa, which include both goods transiting through Namibia and those where value addition took place, had only accounted for 0.4 percent of South Africa’s imports in 2014, which suggests “there may be potential for Namibia to expand its role in transiting goods to South Africa.”
Given the fact the cost of border compliance in Namibia (US$145) equivalent to N$2 175 for imports is significantly lower than that of South Africa (US$657) equivalent to N$9 855 and given that once goods have entered Namibia they will not need to go through border compliance controls when crossing into South Africa – “it may be highly attractive for companies that export to South Africa to ship their goods first to Namibia and then transit them to South Africa,” suggests Luke and his team in their paper.
They noted that the lack of efficiency and capacity within the public sector contributed to bureaucratic red tape, unexpected delays and poor service delivery. In the same vein they suggest Namibia can woo investors by improving governance issues, introducing tax incentives as well as improving regulations related to investment, while creating a good operating and more transparent environment for investors.
Boosting Namibia’s agriculture
The team also noted agriculture (4 percent) and fisheries (2 percent) contributed around 6 percent to Namibia’s gross domestic product in 2014 and as such these are highly strategic commodities.
“However the country has faced difficulties in some areas, such as beef exports to the European Union, due to difficulties to comply with sanitary and phyto-sanitary requirements.”
Why is investment crucial?
“Why is investment important for Namibia? The answer is simple enough: investment is crucial for economic development as it contributes to growth, employment and more generally economic dynamism. Foreign direct investment (FDI) has become a cornerstone of development finance and can be a driver of economic transformation,” noted Luke and his team of economic experts.
Though Namibia’s FDI shrunk to US$414 million (N$6.2 billion) in 2014 from a record US$1.13 billion (N$16.9 billion) in 2012 it was number six in terms of FDIs in the entire SADC region.
The sectors that attracted significant FDI inflows into Namibia are extractive industries such as uranium, diamonds, copper, zinc and oil, and fisheries and banking.