NDP5 to increase manufacturing, agricultural output and maximise benefits from marine resources….Economic Progression: Part 2

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Staff Reporter

Windhoek-The Fifth National Development Plan (NDP5), which was recently launched by President Geingob, is the 5th NDP in the series of a total of seven National Development Plans that are to implement and achieve the objectives and aspirations of Namibia’s long-term vision, Vision 2030.

In sequence, NDP5 will be the third five-year implementation vehicle towards Vision 2030 and will be implemented from the financial year 2017/18 up until 2021/22.

The NDP5 framework is organised around the four interconnected pillars that are founded on the principle of sustainable development, namely: economic progression; social transformation; environmental sustainability; and good governance.

These pillars are aligned with Namibia’s commitment to eradicate poverty and inequality as outlined in Vision 2030, the Harambee Prosperity Plan (2016), and the Swapo Party Manifesto (2014). Additionally, the pillars support the global and continental development frameworks to which Namibia is committed. These include Agenda 2030, Sustainable Development Goals (SDGs), The Paris Agreement (CoP21); African Union (AU) Agenda 2063 and SADC Regional Indicative Strategic Development Plan (RISDP).

Within these contexts, Namibia commits itself to enhancing growth and economic diversification while addressing challenges that include a high degree of regulation and a mismatch between the skill levels in Namibia’s workforce and the skills demanded by the labour market.

NDP5 identifies five game changers that will move Namibia from a reactive, input-based economy towards a proactive, high performing economy. The game changers are: Increase investment in infrastructure development; Increase productivity in agriculture, especially for smallholder farmers; Invest in quality technical skills development; Improve value addition in natural resources; Achieve industrial development through local procurement.

Economic Progression
Structural transformation through value-added industrialization.

Manufacturing Sector: Where we are
The Namibian economy’s manufacturing activities remain highly dependent on inputs from the primary industries. The whole sector contributes just about 11 percent to GDP. The sector contracted by an average of 1.4 percent during the NDP4 period and there was a contraction of about 2 percent in manufactured products exports over the 2012-2015 period.

In order to break out of the Middle Income Trap, Namibia needs to diversify its economy while also producing a diverse range of exports at increasingly high levels of sophistication.

Therefore, the three factors that are critical to the structural transformation of the manufacturing sector are: Diversification of the economy; Sophistication of exports (value addition); and Good governance that protects a sound investment climate and business environment.

Desired outcome
By 2022, the contribution of general manufacturing sector to GDP has increased from N$17.8 billion in 2015 to N$20.6 billion.
Challenges
A significant portion of the economic activities in key sectors (agriculture, fisheries, tourism, manufacturing and services) remain primitive, informal and limited. Limited manufacturing technology and skills for agro-processing and modernisation of the agriculture sector have resulted in limited economies of scale and hence value addition. Furthermore, the mining industry cannot complete the full pipeline of “mining value addition” because some mines are unable to process minerals beyond concentrates mainly because of the lack of economies of scale. Namibia’s retail operators are dominated by foreign players procuring their products from foreign suppliers hence this raises a challenge for domestic produce to find retail space.

In addition, there is a limited awareness about the technical standards products have to comply with.
Agriculture Sector and Food Security. Where we are
Even though agriculture contributes only 3.8 percent to GDP, it remains a strategic sector as it supports above 70 percent of the Namibian population and employs about a third of the working force. The importance of the sector in addressing food security and livelihood is acknowledged. The continuous drought and frequent outbreaks of animal diseases have negatively impacted the growth of the sector during the NDP4 period, contracting it by an average 2.2 percent per year. Nonetheless sustained efforts have continued to move the country from an exporter of live animals to an exporter of value-added agricultural goods.

Desired outcome
By 2022, the proportion of food insecure individuals has dropped from 25 percent in 2016 to 12 percent and food production has increased by 30 percent cumulatively over the NDP5 period.

Challenges
Poverty is a major factor limiting access to food. Access to food in Namibian is affected by reliance on market purchases for food. When combined with the heavy reliance on food imports it makes Namibia vulnerable to high food prices. Overall the production scale of smallholder farmers is low, which is attributed to limited access to inputs. The other factors that affect productivity includes poor soils, access to land and frequent occurrence of natural disasters such a drought and food. Access to sustained technological progress also affects smallholder productivity, leading to their failure to maximise yield through intensive farming practices.

Rural Economic Development: Where we are
Rural economic development is vital since most farming and tourism activities take place in rural areas and more than half (57.9 percent) of the population live in rural area. Economic activity in rural areas remains low since most of the businesses are very small (informal or unregistered) and mainly concentrated in wholesale, retail, accommodation and food services. Manufacturing in rural areas is hampered by many constraints such as inadequate skills, poor access to markets and lack of access to financial resources. Thus, business activity in rural areas is limited to those sectors with low entry barriers. Integrated planning both at the national and sub- national level is crucial to improve access to services and trigger economic activities for the rural economy.

Desired outcome
By 2022, the rural quality of life and socio-economic well-being has improved with rural poverty declining from 37 percent in 2010 to 25 percent..

Challenges
The land tenure is a developmental challenge for rural development. Namibia inherited its land tenure system from the colonial period. Land in Namibia is either freehold, communal, or state-owned. As a result, the distribution of land tenure is extremely unequal. Until land reform makes it possible for more Namibians to own land, progress in rural agricultural development will be slow. Land tenure constrains economic development in settlements because the 20 years of user rights does not allow property holders to invest or use their property as collateral to access development funding. Moreover, the land application process is lengthy and cumbersome.

Further, there is poor coordination of rural development interventions. Frontline services are delivered by a number of government and non-governmental agencies without reference to each other, which leads to wastage of resources and duplication of interventions. Most programmes in rural areas have similar objectives and they are spread too thinly across several line ministries resulting in limited developmental impacts.

Blue Economy: Where we are
Namibia’s share of the South Atlantic Ocean provides valuable goods and services. It is an important resource for tourism, fisheries, transport and logistics as well as mining. The blue economy includes key industries and resources such as fisheries and aquaculture, water resources, shipping and transport, tourism, marine renewable energy, minerals, genetic resources, pharmaceutical, blue carbon trading, biotechnology and general sea-based products.

Namibia’s territorial waters and its Exclusive Economic Zone (EEZ) can significantly contribute to its economic transformation agenda. This is particularly important because Namibia’s EEZ could be enlarged significantly based on the country’s submission of an application to the United Nations through the United Nations Convention of the Law of the Sea (UNCLOS) for the extension of its continental shelf. In order to capitalise on the potential of the blue economy, it is essential to create a governance framework that strengthen linkages and minimise conflict between fisheries, transport, environment, mining, tourism and logistics since they all operate in the same coastal area.

Desired outcome
By 2022, Namibia will have implemented a blue economy governance and management system that sustainably maximises economic benefits from marine resources and ensures equitable marine wealth distribution to all Namibians.

Challenges
A lack of coordination and integration between sectors due to the lack of a regulatory and legal framework which, ensure appropriate planning, management and governance.

Fisheries: Where we are
The fisheries sector is the third largest income earner after mining and tourism and contributes about 15 percent of total exports. The annual marine landings of about 550,000 metric tons (MT) valued at an average of N$10 billion (about 800 million US$) ranks Namibia as the nation with the third largest fishery capture in Africa, after Morocco and South Africa, and 30th worldwide. About 16,300 people are directly employed in the fishing sector, while others are indirectly employed in fisheries related activities such as stevedoring services, fishery-related supplies and logistics. Fisheries also constitute a vital component of domestic food security by providing a source of protein.

Namibia’s freshwater fisheries have the potential to generate 5,000 tonnes a year of high quality protein, through sustainable fisheries management (NNF 2017). In addition, healthy fish stocks in the northern rivers contribute to ecosystem functioning and biodiversity conservation. However, there has been a collapse of the inland fisheries of the Zambezi and Chobe rivers due to over-harvesting and commercial fishing.

Desired outcome
By 2022, Namibia is the key fisheries and processing hub in the South West Atlantic Ocean through increased volume of fish handled, canned or processed in Walvis Bay cumulatively by 40 percent.

Challenges
One of the key challenges to be addressed during NDP5 is the enhancement of fisheries’ market access to lucrative export destinations by ensuring compliance to more stringent SPS (sanitary and phytosanitary) standards. This will involve strengthening current certification systems on export, including stronger official control measures on Hazard Analysis Critical Control Point (HACCP), fisheries and aquaculture health systems. Currently Namibia is importing small pelagic fish for canning and Patagonia squid for value addition and re-export. Such importation need to be encouraged in order to achieve the substantial volumes needed for economies of scale in value addition activities such as canning.

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