Namibia recorded a trade deficit of N$18.7 billion for the third quarter of 2014, the Ministry of Trade and Industry confirmed to The Villager this week.
Minister of Trade and Industry (MTI), Calle Schlettwein said the Namibian merchandise trade balance (trade balance of goods) has experienced a sharp deterioration over the past years.
Namibia’s trade deficit has been largely recurrent in the past few years since independence because that country is a largely consumptive economy whose manufacturing industry is still in its infancy. The country imports the bulk of its consumables from South Africa because an unbreakable umbilical code created during the precolonial times when Namibia was governed under the protectorate of the now regional industrial hub.
Although the latest statistic indicate a 3% decrease from 2013, when Namibia recorded N$19.3 billion Schlettwein argues that those numbers are still high and keeping Namibia in the red by billions.
“The Ministry of Trade and Industry recognises the risks associated with the current negative trade balance, and has undertaken some measures within its mandate to address the situation, as well as advocated those beyond the Minister’s portfolio, lying for instance, with the Bank of Namibia, such as setting the levels the interest rates,” said Schlettwein.
In the 2014 third quarter alone, Namibia recorded a trade deficit of N$6.4 million hence the balance of Trade in Namibia averaging N$1.5 million from 1999 until 2014.
However, the maximum balance of Trade was N$577.64 million recorded in the third quarter of 2004 whilst the lowest recorded was N$-6.7 million in the first quarter of 2014.
According to Schlettwein, the recent measures include the amendments to the Credit Agreement Act and the upward adjustment of interest rates, in order to control the levels of cheap loans available on the market which often result in unsustainable levels of borrowing and the over-consumption of expensive imported consumer goods, such as vehicles and electronics.
“Moreover, in order to support our domestic firms and avoid their crowding out by foreign competitors, some of the industries with a distinct potential to grow and succeed are granted a temporary Infant Industry Protection status from foreign imports,” said Schlettwein.
From the 1999-2007 period, the trade balance was relatively stable over the period, fluctuating minimally between low deficit and surplus, in 2008 the trade deficit increased drastically by 4.5 times to N$5.4 billion compared to the previous year, and almost doubled rising to N$10.3 billion in 2009.
Schlettwein reiterated that the Namibia kept on recording annual negative trade balances despite having seen a slight improvement in 2010.
Currently the exports are dominated by diamonds (25% of total exports), other minerals and ores (uranium, copper, zinc), followed by fish and fish products, meat and meat products, and beer. The largest import commodities constitute fuel and manufactured goods, including vehicles, electronics, and articles of iron and steel.
Schlettwein noted that according to the recent data, the most significant export markets are South Africa, and other Sub-Saharan nations (e.g. Botswana and Angola), the European Union and other European countries (e.g. Switzerland), while imports mostly originate from South Africa, China and the European Union and other European countries.
27% of Namibia’s total exports go to South Africa as it is its main export partner whilst 17% goes to the United Kingdom. With 66% of total imports, South Africa also remains Namibia’s major import partner (66% of total imports).
However, around the same time last year, the official trade statistics displayed a steady decline in the country’s trade deficit, which stood at N$1.5 billion and according to the Namibia Statistics Agency (NSA), that deficit was valued at N$1.7 billion in January 2014.
NSA statistics for the same period last year also showed a drop in imports with a value of 21.2% from the N$5.8 billion earlier in that year, to N$4.6 billion, the lowest import value recorded since July 2013.
The lower import values were attributed to a drop in demand from Germany, China and the United States; with pooled imports from these three countries falling by 67.7% to N$265 million.
Thus Namibia imported N$821 million worth of products from these three countries early 2014.
Meanwhile, in recent reports it was recorded that Namibia spent about N$5 billion in one month just on imports.
Due to the low revenue from major markets, exports earnings dropped from N$4.1 billion in December to N$3.1 billion in January.
According to the recent data from Namibia continues to be a net importer of South African produce South African Revenue Services (SARs), Namibia in October alone imported goods worth N$5 billion whilst South Africa, only imported goods worth N$620 million from Namibia during the same period, showing a trade deficit of N$4.38 billion in favour of it (South Africa).
In 2013 Namibia was recorded amongst countries with the biggest trade surpluses, with Botswana, Zambia, Zimbabwe, Mozambique, the Netherlands and USA performing better than its counterparts such as Nigeria. In January alone South Africa recorded a gap of ZAR 24.22 billion.