The Namibian manufacturing sector declined by almost 20% last year as it bore the brunt of the impact of Covid-19 and associated lockdown measures. This means that during 2020, several local manufacturers were forced to stop or minimise operations.
According to FirstRand Namibia Economist Ruusa Nandago, the impact was further compounded by a decline in demand for manufacturing products as personal and corporate incomes in the domestic economy became constrained.
As a result, output in the manufacturing sector declined by 19.6% year-on-year (y/y), compared to a growth of 4.3% y/y during 2019.
“This contraction makes manufacturing the third-worst performing sector during 2020 after hotels and restaurants, which contracted by 33.1% y/y, and transport and storage, which contracted by 22.4% y/y over the same period. Given that this sector contributes 11% to GDP, this had a material impact on overall economic performance,” Nandago noted.
The FirstRand economist explained that driving the significant decline in the manufacturing sector were spillovers from the decline in the mining sector.
Said Nandago: “Declines in diamond production because of lockdowns and a slowdown in commodity prices had an impact on the diamond processing subsector of manufacturing, which fell by 14.1% y/y. Similarly, metals processing declined by 46.8% y/y. The lingering effects of the 2019 drought also compounded this decline as meat processing
declined by 40.8% y/y. This was mainly a result of farmers rebuilding their livestock herds and thus reducing the supply of meat to be slaughtered. Lastly, alcohol bans and reduced alcohol sales both in Namibia and South Africa resulted in reduced beverage production, which declined by 36.5% y/y”.
Looking ahead, Nandago expects output in this sector to recover from the levels seen during 2020 in the absence of severe lockdown measures.
“Total output is, however, expected to remain below pre-pandemic levels, owing to reduced demand in the economy, the closure of some smaller manufacturing companies and restrictions on alcohol sales because of curfews,” Nandago concluded.