Namibia has experienced nine consecutive quarters of economic contraction and the country is officially in a recession. The finance minister Calle Schlettwein has responded sharply to the economic challenges the country faces but, has also come under fire for proposed tax adjustments and others.
During mid-October, the minister held a meeting with private sector stakeholders and called on the sector to invest more.
He expressed concern about what he described as the declining private sector investment level and increasing outflow of local capital.
“Private sector investment remains low and, in fact, has been declining over the past two years. At the same time, the economy has witnessed a perpetual outflow of investment and reinvestments elsewhere,” Schlettwein said.
He added that the production and processing capacity of the economy remains narrow with the country still importing the most basic consumables. This high-level of importation continues to erode the country’s balance of payments. “
Moreover, to further compound matters, the minister announced in his mid-term budget review that a meagre 27% of the capital budget allocation had been utilised by the mid-term leading to N$1.8 billion of the development budget being reallocated to the operational budget.
Namib Mills understands the challenges of growing the Namibian economy and remains not only rooted in but also committed to, the country and its people.
The company has invested hundreds of millions into creating infrastructure to support employment opportunities. Recent calculations made by Cirrus Capital indicated that it costs in the region of N$1 million to create a sustainable job. And Namib Mills has risen to the occasion.
Established in 1982, producing 16 tons of maize monthly, the company has continued to invest into the country over the years.
In the last decade alone, Namib Mills has created 1010 new jobs and has invested roughly N$1.3 billion.
In 2011, the company invested N$70 million to quadruple its pasta-producing capacity to 4.7 tons per hour, creating 50 jobs. A year later, in 2012, the company created Namib Poultry Industries, investing N$660 million and creating 650 jobs of which more than 500 are unskilled labour.
This is a particularly important sector for Namibia. In 2012, a report on employment by First Capital indicated that youth unemployment remains one of greatest challenges to the economy with a fast-growing youth unskilled labour force. “The high concentration of the labour force in the age group of 20 – 24 reflects the entry of new labour force after finishing high school. Most of those entering the labour force in the 15 – 19 age group are grade 10 failures who are not allowed to repeat their studies. There are significant costs to society if decent jobs are not generated to absorb the youth into the economy, including increased informality in the economy and potentially, social and political instability,” the report noted.
Namib Mills has continued to invest and grow the job market. In 2013, its Feedmaster subsidiary invested N$85 million into its monogastric feeds creating 50 jobs and in 2014, it developed its cold chain distribution network for NPI, investing N$30 million and creating 40 jobs.
With the crippling drought in 2015/16, Namib Mills responded by investing N$11 million into a reverse osmosis water treatment plant at its broiler farm just north of Windhoek, creating ten new jobs.
By 2017, the company developed its instant porridge range, investing N$15 million to create 20 new jobs. In the same year, it embarked on doubling its wheat mill output, investing N$100 million and creating 20 new jobs. This year, Feedmaster expanded its ruminant feed production investing N$35 million and creating ten new jobs.
In 2019, the company will have invested N$135 million in a new super loaf bakery, an entirely new Namibian product, creating a whopping 125 jobs and by 2020, it will expand its pasta plant to 9.8 tons per hour, making it the largest pasta plant in sub-Saharan Africa. This will take an investment of N$200 million, creating 40 new jobs.
Responding to these figures, Tim Parkhouse, secretary-general of the Namibia Employers’ Federations, said it is no mean feat taking into account the legislative framework, or lack thereof, which hampers investment and the development of a strong manufacturing sector.
“The government has tried several job creation policies but none have really been effective. The latest Investment Promotion Act has many restrictions on foreign investment with the aim of ‘reserving’ certain levels for Namibians. Sadly this will restrict FDI which we desperately need,” he said.
Investment, whether foreign or local, increases employment significantly, a research paper on the determinants of unemployment in Namibia, published in the International Journal of Business and Management in 2010 found.
“There is a negative relationship between investment and unemployment. Investment must be promoted in order to generate jobs for the majority of the unemployed people,” the study found.
The ease of doing business has also come into focus in recent years and several international reports have shown that Namibia does not fare well in this regard. The latest, an International Labour Organisation report, developed along with NEF in 2017, indicates that Namibia’s dropping in rank between 2011 and 2016 from 74 to 108 for the ease of doing business reflects a worsening of the business environment.
According to Parkhouse: “Many years ago I was consul for Thailand and I was taken to Bangkok for a conference and we were taken to their EPZ, probably the size of Windhoek. I asked how long it would take to get a company registered and operating. The answer, ‘by 17:00. We will give you an office with computers and secretaries and we will bring the authorities to you - telephone company, labour and trade ministry, electricity company etc., etc. You should be ready by 17:00’.
“Namibia has been talking about a ‘one-stop investment shop’ for years. I was the private sector representative at a workshop in Rundu on this subject about ten years ago. Why can we not get these things moving quicker? I believe it is about ready to operate now, but ten years later.”
Meeting with Schlettwein, the private sector also lamented the slow pace of doing business in Namibia with Dr Leake Hangala saying: “We must not live in denial, the economy is tough. We [private sector] are retrenching every day. Government must take tough decisions on spending, not only on staff but [also] political. Namibia cannot continue to be the second largest spender on the public service wage bill.”
Hangala added that government would have to ease its visa requirements.
“We have outdated visas. We must come up with a way to attract investments in our country,” Hangala said.
Former Namibia Chamber of Commerce and Industry CEO Tarah Shaanika said that government must remove bottlenecks to investment.
According to him, there were two projects brought to the table by private investors but that government was indecisive in making a decision.
“One of the challenges we have is bureaucracy and indecisiveness. Public-private-partnerships were brought to government in the Erongo Region to the tune of N$750 million. No response was given by government and we are still waiting for the attorney-general’s response. Indecisiveness is killing investment,” Shaanika said.
No doubt, many other challenges remain, including protection for industries within the operational framework of SACU, high levels of poverty and lack of skills. However, Namib Mills has undertaken to continue to invest into the economy in a sustainable fashion, creating long-lasting job opportunities for Namibians.
2018-12-07 10:50:47 3 months ago