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Peugeot factory kick-starts Namibia’s diversification strategy

2018-12-07  Staff Reporter

Peugeot factory kick-starts Namibia’s diversification strategy
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Dr Hage Geingob

This week I was pleased to officiate at the landmark event – the unveiling of the Peugeot Opel Assembly Plant in Namibia at Walvis Bay.
This is a significant event for the development of the Erongo Region, most notably Walvis Bay. However, its significance is further amplified by the fact that it augments our national development aspirations and signifies to the international community, Namibia’s intent to become one of the premier destinations for foreign direct investment in Africa. 

From the onset of our independence, it has been the Namibian government’s objective to create conditions necessary for increased investment and the development of a competitive industrial sector.
Furthermore, in recent years, we have intensified efforts to promote local value addition and strengthening of forward and backward linkages within the Namibian economy. 

According to the World Bank research, stable sources of foreign financing play an integral role in leveraging the growth potential of developing economies. Among other capital flows, foreign direct investment is often considered a superior alternative due to the attributed benefits it brings to the host economy: permanence in the long run, knowledge spillovers, and other positive externalities. 

We should always be mindful of the fact that government’s efforts to attract foreign direct investment to Namibia’s shores are not merely for the purpose of establishing factories, but these investments should ultimately buttress our efforts to boost local enterprise development and increase the entry and participation of emerging and existing businesses into the mainstream economy. 

Namibia is still faced with the triple challenge of severe pockets of poverty, unemployment and unequal distribution of income. These are the lingering legacies of our country’s past, which was characterised by the politics of structural economic exclusion, among other things. 
Sustained and shared economic development is viewed as a “condicio sine qua non” for redressing imbalances of the past and eradicating these scourges from the fabric of our society. 

Hence, it is our hope that the Peugeot Opel Assembly Namibia Plant will be a project that will bolster the diversification strategy set out in our Growth at Home Strategy. 

We expect our local small and medium enterprises to incur benefit from this investment, further enabling Namibia to realize the positive externalities and spillovers from FDI. The automotive industry is one of the sectors identified in our Growth at Home Strategy as a priority sector.  We believe, that by attracting investment into automotive, we will help diversify our economy and support our ambition to become a regional gateway that offers a stable political and economic environment for multinationals, such as Peugeot-Opel, to establish regional headquarters and manufacturing facilities.

FDI theory states that the location decisions of multinational enterprises are determined by the relative location advantages of particular countries for certain activities. In terms of location advantages, Namibia offers a strategic location to investors, as a gateway into the Southern African market.  Through our port of Walvis Bay, which is the pinnacle of our transport corridor concept, we are able to provide access to other all destinations within SADC, including land locked countries that have become sea-linked through the Walvis Bay Corridor. 

Due to trade arrangements such as the South African Customs Union (SACU) and the free trade agreement under SADC, presence in Namibia translates into having access to a market of 330 million people. Namibia is signatory to the African Continental Free trade Area Agreement (AfCFTA), an instrument that has gained traction and expected to increase market access to over 1 billion people. 

Furthermore, in terms of our SADC Industrialisation Strategy, which was approved in 2015 and aligns with our continental vision, Agenda 2063, we have affirmed our commitment to the promotion of industrial development and regional value chains, as a means to achieve poverty alleviation and the economic emancipation of the people of our region. 

We are cognisant of the fact that the primary objective of all investors, whether multinationals or local small and medium enterprises, is to make profit. This is the essence of business. 

However, given the socio-economic realities within our region, it is pertinent that investors remain conscientious of issues such as the high level of youth unemployment, gender parity and undertake all efforts to support our development agenda. While the interest of business is primarily the triple bottom line, to make profits, the business of government is to deliver social returns. 
Maintaining peace, stability, social cohesion and unity – those are our measures of profit. That is my triple bottom line. 
Economic growth is a necessary condition for human progress, but not sufficient in itself to guarantee holistic economic development. 
Economist and Philosopher Amartya Sen holds the   belief   that “Economic   growth   without investment in     human     development     is unsustainable and unethical”.  

For this reason, government  has  deployed  several  strategies to ensure that Namibia not only becomes one of  the  most  competitive  economies  on  the continent, but also boasts the most educated and skilled workforce. It is therefore pleasing to note the recruitment of a fairly young and diverse workforce at this plant, who will gain added  expertise through      technological transfers.

Through  the  Harambee  Prosperity  Plan,  we have  identified  practical  training  to  enhance skilled labour, including the increase of Grade 10 and 12  pass  marks,  improving  the  quality of   technical   and   vocational   education   and training,   as   well   as   measures   to   enhance labour  productivity,  which  will  contribute  to our human development goals, under the sub-pillar of economic competitiveness.
Improving the competitiveness  of our workforce is becoming   increasingly urgent with the    advent of the 4th Industrial Revolution. This  is  the  new  reality,  which  is characterised by digitisation, artificial intelligence and robotics. Machines are taking over and nowhere is that more profound than on   the   assembly   lines of the automotive industries.  

Robots are replacing the jobs  of factory workers. Although    the continued automation of the   workplace represents a significant shift, we are  not  pessimistic. We believe that by properly educating and training our workforce we will avoid the onset of  structural  unemployment  that  could  result as a consequence of automation.
Having outlined the various      policy frameworks that guide   our   government’s industrialisation agenda, I wish to now focus attention on this investment milestone. The  journey  that  has  brought  us  here  has been   filled   with   challenges.   There   are   a number of countries in the region that would have been happy to host this project, but the negotiations revealed the commitment of the Namibian government  and  Peugeot,  to  make Namibia    the    preferred    choice    for    this assembly  plant.  

I believe that together with Peugeot we have commenced a journey down the    path    towards    mutual    success    and prosperity.    This    investment    signifies    our intent to realise our own industrial revolution in Namibia. A revolution, which will for many decades and years, enable us to provide work, a high standard of living, as well as security and prosperity for our people.

The  Peugeot  Opel  Assembly  Plant  is  another example  of  the  fruits  of  the  robust  Franco-Namibia relationship. Let me thank our French partners for the excellent job they have done. 

In  the  same  vein,  let  me  also  express  my gratitude  to  all  the  local  offices,  ministries and     agencies, whose hard work and determination   have   made   this   project a reality. 
You have all contributed   towards creating   the   necessary   conditions for this investment. I thank you.
*Dr Hage Geingob is President of Namibia. This is an edited version of the remarks he delivered at the opening of the Peugeot Opel Assembly Namibia Plant at Walvis Bay on Wednesday. 

2018-12-07  Staff Reporter

Tags: Erongo
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