By Charles Tjatindi
SWAKOPMUND
The recent workshop on international trends in the seafood industry concluded that Namibia needs to diversify its markets in order to achieve more flexibility. Namibia also needs to shift production more in the direction of value-addition in order to achieve more stability.
In its Value Addition Report, the workshop noted that by enabling more Namibian companies to make overseas market contact at overseas seafood trade shows, as well as to conduct generic industry market research and promotion, more companies would be able to add value to their products.
This will take the heavy burden off their established distribution links, which primarily involve selling at commodity products.
According to the report, because of Spain’s involvement in the Namibian fishery industry, over 70 percent of Namibia’s fish and fishery products are sent to that country.
This has put the Namibian fishery industry in a precarious position, with little or no control over market and prices, particularly in the case of commodity products.
The report suggests that, in order to make the necessary adjustments, it is essential for the industry itself to be actively involved.
“The industry has been far too focused on production and too little focused on the market. This is partly because marketing has been taken care of by mainly foreign partners.
As in any industry, whoever controls the market controls the industry, because marketing is where most of the money is made,” noted the report.
As a result, the Namibian fishery industry must become more market oriented and get engaged more deeply in the value chain by producing more value-added products.
The report however hinted that given the different nature of businesses in the industry, value addition cannot be made across the board.
“It must also be understood that within certain sectors of the industry, there are limits to how far value addition can be taken, either because of the nature of the industry, or because of lack of critical mass (too low volumes of raw material). One cannot, therefore, expect that value addition can be done across the board,” said the report.
Instead, one needs to focus on those sectors and areas that most readily lend themselves to value addition, and then allow the industry in other sectors to continue with commodity production, it added.
Certain forms of flexibility, according to the report, would also be required in this process.
“By allowing the industry to be flexible with regard to commodity versus value-added production and exports, one would ensure that individual companies would be able to maximize their profits, depending on developments on world markets,” it said.
The workshop noted that the Government has several options to help improve the situation of the Namibian fishery industry, mainly by creating an enabling environment in which the industry can develop and prosper.
The industry must first be allowed to become profitable, for without profitability, change will not be possible.
And without a profitable industry, there will be little or no revenue to the Government, the workshop concluded.
Some of the recommendations presented by the workshop include putting an incentive-based evaluation of value addition within the industry at government policy level.
The workshop urged Government through the Ministry of Finance to put these incentives in place for the fishing industry, as failure to do so could stall development of seafood value addition in Namibia, and the country would not succeed in this sector as a result.
Currently, the Namibian seafood industry is “excluded” from any incentives in Namibia’s investment and income tax legislation, the report states.
“The global seafood industry today is market driven, not production driven, and there needs to be incentives in place so that the Namibian seafood industry is able to adapt accordingly. Marketing is important, as this is where most money is made,” said the report.
The workshop argues that Government, through its various line ministries, has been sending conflicting signals to the seafood industry, something that needs to be rectified urgently.
“The Ministry of Trade and Industry and Ministry of Fisheries and Marine Resources have been promoting Registered Manufacturing Status for fish processing companies wanting to commit themselves to the production of value-added products.
“The Ministry of Finance, however, has been more concerned with immediate losses of tax revenue as a result of companies being granted manufacturing status. These conflicting signals to investors by the same Government must be sorted out, because otherwise it will seriously hinder development,” it concluded.