By Wezi Tjaronda WINDHOEK Namibia needs to work on a focused strategy of creating a competitive environment if it is serious about value addition, a local economist has said. The strategy, according to Robin Sherbourne, an economist and editor of Insight Magazine, would answer questions relating to why Namibia has much power potential yet Kudu gas remains untapped, why the country’s investible funds continue to flow to neighouring South Africa and why the country’s financial institutions do not play a major role in financing investments in mineral processing. Sherbourne was speaking on Friday at the Chamber of Mines Gala Dinner on the topic “Adding Value to Namibia’s Minerals”. Namibia is blessed with an abundance of mineral resources such as gold, uranium, fluorspar, zinc, copper, salt, diamonds and lead. And adding value to these minerals, as with other raw materials produced locally, has been the Government’s long-standing objective. But since independence, Sherbourne noted, despite the royalties on rough diamonds and generous tax incentives for manufacturers and exporters together with conducive legislation, the country has not done much in stimulating value addition. This is with the exception of a zinc refinery, cutting and polishing and stone processing. Instead of Namibia asking how it could add value to its minerals, it should rather ask whether it could offer the world a good place to process minerals. With over two million carats of diamonds being mined now, the next step to take after mining and sorting would be value addition. But the cutting and polishing industry only came about because of government action to force the issue – be it through the Namibia Diamond Trading Company and the creation of Namgem and not necessarily because of market forces, added Sherbourne. The result of this forceful approach is a limited number of jobs because companies do not want to cut and polish in the country willingly. The trend in cutting and polishing, said Sherbourne, is that companies have over the last three decades moved from high-cost centres such as New York, Antwerp and Tel Aviv to India and China, thus bypassing southern Africa, which is the world’s largest producing region. “Cutting and polishing are labour-intensive and labour costs in India and China are a fraction of what they are in southern Africa. Naturally, low margin business of cutting and polishing would emigrate to low-cost countries. China and India have done nothing more than take advantage of market forces,” he added. The economist said labour and transport costs were enough consideration to explain the current situation in Namibia. A study conducted by the Bank of Namibia, entitled “Assessing the Potential of the Manufacturing Sector in Namibia”, found that Namibia has had very little industrial growth so that it continues to import most retailed manufactured products mainly from neighbouring South Africa because the sector is characterised by structural weaknesses and operational constraints that include high input costs relating to electricity, transport and port charges. Unfortunately, investors in processing do not only look for mines but a competitive environment in which to process minerals, such as competitive sources of power, good transport infrastructure, water, macro economic stability and skilled and disciplined workers. Sherbourne suggested that an outward-looking strategy aimed at processing for the world market might stand a chance of delivering jobs and growth, but that it would require bringing together several players such as Kudu gas, water desalination, the stock exchange, the Development Bank, Namport, Namrail and create a competitive industrial hub.