Structural transformation of the Namibian economy is based on three main pillars namely market access, industrial development and infrastructure development. The market access pillar has two components; market access at home and market access abroad. Market access at home will be achieved through the adoption and implementation of the Retail Charter Policy framework while market access abroad is realised through international trade agreements.
Namibia’s international trade arrangements include SACU, SADC Free Trade Area, Economic Partnership agreement (EPA) with the European Union, EFTA (Norway beef market) and the on-going Tripartite Free Trade Area negotiations (to combine COMESA-EAC-SADC into an FTA). In principle, this means that Namibia’s 2.4 million population has access to a larger market for its goods and services.
But, of course, in order for Namibia to fully utilise domestic and international market access opportunities, it should have a diversified industrial base economy driven by the manufacturing sector. This is prioritised in the National Development Goals. Namibia’s strategy to industrialise is mapped out in the Growth at Home document which is endorsed by Cabinet, making it a national document. In this document, the country maps out potential sectors where Namibia’s comparative advantages lie and prioritises such sectors as low hanging fruits for industrialisation.
In the 21st century where trade is driven by the services sector, the industrial development pillar calls for a new way of thinking and doing things especially in terms of policy formulation and implementation which should be coupled with a strong monitoring mechanism.
Recognising that presently Namibia has a very narrow manufacturing base dominated primarily by agro-processed products, the Growth at Home strategy, therefore, calls for a diversified economy through value addition activities or processes. However, due to the lack of economies of scale facing many Namibian manufacturers, an innovative approach such as focusing on niche markets should be considered in order to make the growth at home strategy impactful. For example, the export of Namibian beef to international markets such as the EU and Norway is only successful or competitive because the focus is on niche markets. Otherwise, Namibia will never be able to compete with large beef producers such as Brazil and Australia. Nevertheless we have successful companies such as Namibia Breweries which managed to drive Namibia’s exports for beverages in regional and international markets even though most of its raw materials are imported.
How did they do this?
The answer is innovation. Innovation is linked to technology and technology is viable or effective where there is a strong research and development element. The industrialisation agenda should prioritise innovation as the main enabler or driver. Namibia remains one of many African countries that are not deriving the highest value in the value addition process because research and development are overlooked components by policymakers.
Many manufacturers in Namibia, especially SMEs, are still struggling with product development due to lack of applied research and development. Branding, design and marketing are other elements which are very crucial in driving the manufacturing sector. We all know that products such as Coca Cola, All Gold Tomato Sauce or even Windhoek Lager are successful today because of branding, design and marketing.
Some prioritised sectors under the ‘Growth at Home’ such as Pharmaceutical and Cosmetics sector, call for Namibia to add value to indigenous plants in order to produce medicine and/or cosmetic products. Namibia is home to some amazing medicinal plants such as Devil’s Claw, Marula trees, and!Nara plants so it only makes sense.
Essentially, products made from indigenous plants attract high value on the world market due to the medicinal organic properties which come with them. With the world demanding clean or organic alternative remedies for many health anomalies, Namibia has the potential to play a vital role in this industry and it should prioritise this sector.
The other very important component to make the pharmaceutical and cosmetic industry a reality is the issue of ownership through intellectual property rights, patents and trademarks. In order to keep the ownership in the hands of Namibians, the industrialisation strategy should include a human development strategy to allow complete ownership of the manufactured products by Namibians though intellectual property and patent rights. This industry should, therefore, be promoted as per the growth at home strategy in close collaboration with higher learning institutions such as Unam and the National University of Science and Technology (NUST).
So what about infrastructure development? Probably the most significant element of what it means to be an industrialised economy. Infrastructure, both soft and hard, is key to the transformation of the Namibian economy. Firstly, distribution as a component of manufacturing requires efficient infrastructure such as roads and railways.
With Namibia’s railway system being very inefficient, road transport cost has become very high in the country and this has also contributed to the high cost of living in the country. Imagine an SME manufacturer based in Windhoek which needs to distribute its product countrywide to gain a larger market. Without an efficient railway system, road transport costs would remain one of the major hindrances to industrialisation. However, the good news is that Namibia has been developing itself into a logistics hub to serve mainly the southern Africa region.
Industrialisation agenda should therefore not only be viewed as the Ministry of Industrialisation, Trade and SME Development (MITSD) responsibility alone, but as a national responsibility which requires synergies and linkages amongst all ministries and government agencies who have a national responsibility of delivering national projects to improve the livelihoods of Namibians. Industrialisation agenda provides for business opportunities as well as investment opportunities for Namibians and it should be promoted in that manner as it becomes one of the very important routes for employment creation and wealth redistribution and consequently poverty eradication.
• Maria Lisa Immanuel is a Senior Trade & Investment Policy Analyst at the Namibia Trade Forum