• July 9th, 2020

Retail Sector Charter not putting local products on shelves

The voluntary nature of the Retail Sector Charter (RSC) remains one of the biggest challenges hindering its successful implementation. According to a trade and investment analyst at the Namibia Trade Forum (NTF) in the trade ministry, not all retailers are compliant or participate in the initiative and there are not any mandatory regulations compelling stores to shelve local products. 

“Local retail shelves are full of imported products and manufacturers find it difficult to compete for space in the domestic market due to reasons that include, amongst others, consumer loyalty. Consumer awareness is crucial, but marketing is a responsibility of the product owner,” said Roberth Simon, trade and investments analyst at the Namibia Trade Forum. 

Responding to questions from New Era’s Inside Business, Simon noted that local enterprises still face difficulties to convince retailers to stock and sell their products due to health-related standards. He added that retailers have also raised concerns regarding the product quality and supply capacity of Namibian manufacturers.

“The RSC is not a mandatory policy, meaning retailers are not legally obliged to comply with the framework targets. However, NTF has a good working relationship with the participating shops. In terms of non-participating stores, we pursue strengthened consultation and dialogue,” Simon explained. 

“Another challenge is related to higher transportation and procurement costs as one of the main barriers in securing shelf space. Producers indicate that they require logistical support to get their products onto the shelves. Apart from that, businesses seem to be strongly affected by low market demand, followed by high input costs (e.g. utility costs). There is also a need for the retail sector to promote the growth of sustainable enterprises and enterprise development by supporting manufacturers directly,” Simon continued. 

He added that should retailers remain unsupportive of the fundamental objectives of the charter, it will remain the prerogative of the Ministry of Industrialisation, Trade and SME Development to legislate the charter should the voluntary route fail to realise the desired aim within a feasible time frame, which is 2016 to 2021. The trade ministry has given NTF five years to report comprehensively on the compliance and impact of the charter. 

Namibia’s Retail Sector Charter stipulates principles and targets which will ensure greater access to the retail market for local beneficiaries. According to Simon, this intervention will be used to monitor and assess the impact of and its contributions toward the “Growth at Home” strategy. 

Furthermore, it is envisaged that the charter should facilitate the creation of a suitable climate for local procurement, stimulate demand and accompany growth targets. This will best be achieved through stronger dialogue and cooperation between the public and private sectors. The overall aim of the charter is to stimulate local manufacturing; facilitate meaningful job creation; reduce unemployment; and deliver enduring changes in consumption patterns. The NTF assesses participating stores’ compliance through the application of an annually submitted scorecard in three areas, namely, local sourcing, corporate social responsibility, and enterprise development. The scorecard is currently being implemented in the fast-moving consumer goods (FMCG) sector which include major retailers such as Pick n Pay, Shoprite and Spar Namibia. 

Said Simon: “Although NDP4’s directive is to improve shelving space of locally manufactured goods by 20%, the lack of a reliable database of foreign imported products make it challenging for Namibia to quantify the exact share of local products available in the market. However, the traceability statistics challenge will be addressed through the Namibia barcode system in future to determine the exact amount of local production.”

Simon is also of the opinion that the retail charter does have an impact in the Namibian manufacturing sector, saying: “As you are aware policy reform takes time to observe results, and the same is true for the charter. The past three years of the charter implementation led to an institutional set-up and enterprise development program (SDP). Under the former, the Namibia Barcode Center is operational while under the latter the Namibia Trade Forum will implement a phase II of the program to augment manufacturers’ capabilities enabling them to supply formal clothing retailers in the country.” However, he emphasised that the SDP Phase II will only begin once funds are availed from the trade ministry’s budget.

Weighing in on retailers buying from local companies, chairperson of the Namibia Manufacturer’s Association, Brian Black, said the entire nation needs to support local manufacturers. Black called on all Namibians, specifically the government, to consider the economic impacts of supporting local manufacturers. “When you support local then you create local jobs, improve local industrial capacity and the money is kept within the country. Even if other products are cheaper, we as Namibians need to dig deep to ensure we support local manufacturers,” said Black. 

He also bemoaned the lack of an incentive from the government for local manufacturers. “In Botswana for instance, manufacturers starting out are given a tax rate of between zero and seven percent and this is what we need to consider. We need to see the bigger picture. We need to ask ourselves if we are serious about manufacturing. We need to put our money where our mouth is. We must be willing to take a calculated risk,” Black noted. 
– ebrandt@nepc.com.na

Edgar Brandt
2020-02-06 08:01:36 | 5 months ago

Be the first to post a comment...