To reinforce economic growth, reduce income inequality and increase employment, the industrialisation and trade ministry adopted a theme of “Growth at Home”. As such, ministerial programmes are geared toward removing supply side constraints, increasing productive capacity, as well increasing the competitiveness of Namibia’s industries in the domestic, regional and international markets. This ministry also deals with the promotion of growth and development of the domestic economy through the formulation and implementation of appropriate policies to attract investment, increase trade, develop and expand the country’s industrial base.

New Era’s head of business, Edgar Brandt (EB)recently interrogated Michael Humavindu (MH), deputy executive director in the industrialisation and trade ministry, on Namibia’s trade endeavours and progress on industrial ambitions. 

EB: What is Namibia’s current state of industrialisation?

MH: Namibia’s annual manufacturing gross value added (GVA) has since 2015 hovered around 12% of Gross Domestic Product (GDP). Our ambitions are to ensure we start seeing that parameter attain 15% in a very short period and as per the SADC ambitions reach 30% over the next 15 years. Although the outcomes show a small manufacturing sector, our overall industrial activity in Namibia is robustly evident. Comparatively, our manufacturing GVA levels are below the SACU average (RSA effect) whilst actually slightly higher than the SADC and Africa’s average levels.  

EB: What do you feel are the best opportunities for the domestic manufacturing sector?

MH: Opportunities exist in many sectors as identified in the Growth at Home Execution Strategy as well as subsequent studies/analyses from various quarters over the past six years. Key sectors such as agro-processing, both horticulture and beef processing, still offer good opportunities, seafood processing, biomass, cosmetics,  mineral beneficiation such as gemstone and diamond, wildlife products and service industries such as tourism that also imbue manufacturing needs such as packaging. 

EB: What has been done to improve access and cost of finance for domestic manufacturers?

MH: Finance as a critical level remains a serious barrier for domestic manufacturers. However, developments be it in policy, legislation or strategic frameworks, point to a portend of good things to come. Reforms such as on Land Reform, Investment Bill and Special Economic Zones will help ensure the optimisation of efficient deal structuring around domestic manufacturing, with perhaps also a relook at leases in communal settings as a good imperative. Recent innovative financing instruments such as a credit guarantee scheme, and a national venture capital fund will also go a long way to ensure access to finance. 

On the other hand, we need to expend more effort on ensuring diversification of collateral definitions as well as mainstreaming the appreciation of intangibles such as intellectual property rights in our business finance lexicon and delivery.

EB: How best do you believe Namibian manufacturers and producers can benefit and develop regional value chains?

MH: It is imperative that Namibians identify and appreciate the full nodes of a value chain they intend to co-develop with other business partners from regional member states. In that way, they will appreciate the cost and benefits of participating in each mode of the particular value chain-which will ensure effective apportioning of tasks-i.e. task trading. Similarly, appreciating the full nodes of each value chain allows one to appreciate the requisite policy enhancement measure that is needed and the subsequent deployment of network capital is then bound to deliver such support, be it incentives, infrastructure support or so on.

EB: How can Namibia’s version of the Automotive Production and Development Programme (APDP), which was gazetted in August 2021, enable the sector to effectively utilise existing SACU provisions? 

MH: The 2019 National Automotive Assembly and Development Policy (NAADP) provided for the rolling out of a Namibian APDP as a measure to further support our ambitions. These policy measures are mainly premised on combustion engine driven vehicles whilst industry dynamics now point to Electric Vehicles and Hydrogen Fuel Cells driven models. Thus the Namibian APDP as an extension of the SACU wide programme aimed to support any assembler here to utilise current SACU provisions. Going forward, the ministry is readying to embark on an automotive study to ensure the updating of the policy framework as industry dynamics are evolving on different paths.

EB: What is the status of the Peugeot factory at the coast and what lessons has Namibia learned from this initiative?

MH: The factory is currently under care and maintenance as shareholders were expected to have a meeting towards the end of May 2024/early June 2024 to decide on the way forward. As Namibia, we have learned various key lessons from the experience, notably on sector enhancement measures as well as policy space issues such as Rules of Origin. The previously-mentioned automotive study that has just been initiated will mainstream these lessons into an updated NAADP. 

EB: How can Namibia’s lucrative minerals sector take advantage of and promote regional value chains?

MH: There are vast opportunities that can be driven under this aspect and this is also where the imperative of green industrialisation comes to the fore. Harnessing critical raw minerals such as lithium and Rare Earth Elements provides many avenues for Namibia to stake out some space in electric vehicles sector and associated products such as the electric battery with other equally endowed Member States. Adding the sector-wide enablers such as renewable energy supports efforts towards green steel as well. 

EB: Given Namibia’s relatively small market and production capacity, how can Namibian businesses prepare to take full advantage of the African Free Trade Area?

MH: The African Free Trade Area implies an increased competitive platform of productive capacity, otherwise we lose out on the opportunity. There is no resting on our laurels and we should invest in Research and Development, embrace product development innovation and boost our technological and digital absorption and deployment levels immensely to ensure we offer competitive products and services. These are imperatives that we cannot afford to overlook. 

EB: What do you feel are the low-hanging fruit to boost Namibia’s regional, continental and global trade ambitions?

MH: Our country’s peace and stability is an often-undermentioned lever that we can always bank on; it counts majorly when decisions are made in terms of business location and business trading paths. Our geographic positioning which can be marketed as a gateway to and from markets supports also our regional, continental and global trade ambitions. And so are our infrastructure development levels which obviously points to relative ease of trading conditions within the country. Finally, our natural capital endowment is key in ensuring we can capture some nodes of regional, continental and global value chains. Incidentally, our past years in investing in human capital indicate that at the basic levels, we can offer some requisite labour as per requirements; bar the difference that manifests itself in skills deficiencies. The introduction of a Special Economic Zones regime will at the meso-level ensure some institutional framing to enable the development of such value chains if managed effectively. 

EB: What are some of the deficiencies at policy and regulatory levels that urgently need to be addressed to achieve efficient manufacturing capabilities and eventual industrialisation?

MH: There are common challenges such as ensuring we align our incentives framework to speak to the needs of manufacturing and industrialisation. There is a need to ensure a policy framework that builds the entrepreneurship ecosystem is introduced. We need to move from the 2021 Mineral Beneficiation Strategy to a comprehensive policy, there is a need to mainstream industrial resource efficiency within our overall industrialisation agenda and that we revisit the skills deficiency by introducing skills enhancement measures such as tooling and dyeing.