Windhoek
An export promotion strategy that is responsive to current trends in global trade and the latest developmental needs will increase the chances of the Harambee Prospect Plan (HPP) creating a prosperous Namibia within the defined timeframe. This is according to Standard Bank’s manager of economic and market research Mally Likukela, who said a defining feature of developing countries, including Namibia, is the relatively small size of their domestic markets, and when demand in the home market is limited, a strong export performance is vital for economic growth.
“In this regard a responsive export promotion strategy that is embedded into the HPP will ensure export-led growth – a key ingredient in the achievement of national prosperity. Integrating such a strategy within the HPP will not only help to speed up Namibia’s industrialisation process, butwill also increase exportation of goods for which Namibia has a comparative advantage,” said Likukela.
Likukela says exports play an important role in any economy, as it influences the level of economic growth, employment and balance of payments. He noted that government’s past efforts to promote exports have paid off in the form of lower transport costs, globalisation, economies of scale and reduced tariff barriers and have helped exports take up a bigger share of national income since Independence. Latest statistics from the Namibia Statistical Agency (NSA) show that exports increased to N$14.6 billion in the fourth quarter of 2015, up from N$12.8 billion in the 3rd quarter of 2015. Furthermore, exports have averaged N$6 billion from 1999 until 2015.
“Given the significant role of export in the economy, governments across the world are encouraged to continue pursuing sustainable exports promotion strategies that respond to current developmental plans and requirements. Now more than before Namibia urgently needs to craft a strategy that will respond to current developmental needs, as reflected and presented by the HPP,” Likukela stated. He continued that the export promotion strategy being advocated for is simply that public policy measures that could enhance export activity at company, industry, or national level.
Although Namibia boasts a number of such initiatives in the past, world trade has significantly transformed and new strategies that also speak to the HPP are thus needed. Nowadays there are many forces that are at play to determine global trade and export promotion is one of the principal opportunities that government has to influence the volume and types of goods and services exported from Namibia, Likukela explained.
Chapter Four of the HPP emphasises the importance of the economy in the fight against poverty and corruption. It states that the most effective way to address poverty is through wealth creation, which in turn is to be done by growing the economy in a sustainable, inclusive manner and through the creation of decent employment opportunities. In this regard a minimum 5 000 new jobs in the manufacturing sector are to be created during the Harambee period. Export promotion thus becomes critical in achieving this goal.
“Experience has shown that growth in exports can create decent employment. For example, the growth in the export of manufactured products (i.e. metals, fish, meat etc.) has created many jobs in the manufacturing industries across Namibia. Traditionally, export jobs in manufacturing industries have been an important source of full-time employment in Namibia. Although in recent years exports have become more diversified with a greater emphasis on service sector based exports government can still ensure massive job creation by promoting exports in line with the HPP aspirations,” Likukela explained.
Chapter Six of the HPP says: “Modern, reliable infrastructure is critical for high and sustained economic growth. Without it, almost everything in the economic value chain tends to be slower, less reliable and more expensive than is necessary.” Likukela is of the opinion that if government is successful in raising exports, which are a critical component of aggregate demand (AD), it can help increase AD and cause higher economic growth needed to propel Namibia to prosperity.
“Growth in exports will also have a knock-on effect to related ‘service industries’. For example, the success of manufactured exports will help the local economy with local service providers (i.e. transport, telecommunications etc.) and many businesses, including Small and Medium Enterprises can benefit from increased AD,” he noted.
In addition, Likukela said poverty in its various forms has increasingly occupied the attention of government and hence it’s not a surprise that it is at the centre of the HPP goals. Export promotion can, therefore, be linked directly to the desired outcome with respect to hunger poverty during the Harambee period, such as zero deaths in Namibia attributed to a lack of food.
“One of the most direct ways in which export promotion can impact on poverty is via the impact it has on wages, employment and profits from production (e.g. farmers). Increased export-oriented activities, in the agricultural sector for example, will result in increased demand for unskilled labour, which will in turn result in increased employment opportunities and/or wage increases for this group of workers. Given that in Namibia, the majority of the poor are unskilled, the scope for direct poverty reduction via export promotion thus becomes substantial and is well within the HPP aspiration,” Likukela noted.
In the past few decades, Namibia has had a persistent current account deficit, which could be attributed to the the country’s relatively poor export performance. In 2015 Namibia’s trade deficit widened, reaching N$39.2 billion by the end of last year. According to the NSA, goods imported into Namibia increased by only N$5.5 billion to N$97.6 billion in 2015, up from N$92.1 billion recorded in 2014.
The NSA further states that the country’s overall exports declined by N$6.3 billion (9.8 percent) to N$58.4 billion, compared to N$64.7 billion in 2014, thereby widening the current account deficit. This situation does not augur well with the aspirations of the HPP. “To improve the current account deficit and support the HPP government needs to promote exports,” Likukela maintained.