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Years of arrested Development Why Namibia is failing to meet targets and implementing policies

Fri, 10 February 2017 22:40
by Villager reporters
News Flash

When President Hage Geingob launched the Harambee Prosperity Plan in April 2016, he emphasised on a number of issues one of them being entrepreneurship and enterprise development.

In the same spirit, Geingob changed the former trade and industry ministry to trade and industrialisation. He also appointed Penny Akwenye as his policy advisor on implementation and monitoring and promoted Tom Alweendo from National Planning Commission to director to minister of economic planning in the Presidency. When Calle Schlettwein succeeded Geingob as trade minister in 2012, he spoke about the need to establish industrial parks and presented to the National Assembly on 17 February 2015 the proposed implementation strategy for Namibia’s Industrial Policy, the Growth at Home Strategy.

Schlettwein said the Growth at Home was a theme chosen to reinforce the importance of accelerating economic growth, reducing income inequality and increasing employment. The government then adopted it as the country’s first ever industrial policy meant to attain the strategic objectives for manufacturing as outlined in the 4th National Development Plan.

These objectives, he said, would be supported by improved logistics and infrastructure, improvements in the ease of doing business and ongoing dialogue and partnership between government and the private sector. “Therefore, the debate on the industrial policy has shifted in recent years from the question of whether developing countries should or not seek to industrialise, to the question of how to best design strategies and subsequent intervention tools which can promote a process of inclusive and sustainable industrial development,” Schlettwein told the National Assembly then.

Industrialisation

Both President Hage Geingob and Schlettwein have spoken about establishing industrial parks, which are common in China.

When he was the premier in 2013, Geingob hosted a Chinese delegation from the Non-Ferrous Metals Investment Holding who presented a proposal for iron ore mining and industrial park projects in the Kunene region. ECE had discovered a deposit of 3 268 billion tons of iron ore at the Orumana village, about 30km south of Opuwo.

The company said the multi-billion dollar industrial park would be built near Opuwo and that when completed, the projects would contribute US$700 million (about N$6,2 billion) to the gross domestic product (GDP) of Namibia and employ about 5 000 Namibians.

According to the company, US$20 million in geological, geophysical prospecting, drilling and trench work had been invested at the time. The industrial park, the company said, would be based on iron ore mining and steel smelting, supported by related industries, including section bar processing, machinery, trade, logistics, hotels, among others. Schlettwein said the concept of an industrial park is a very exciting proposal.

“We are looking at a large project to significantly create jobs, skills’ development, wealth creation and value addition to our raw materials,” he said at the time. In April 2014, Schlettwein said the trade ministry had set aside N$593 million in the 2014/15 budget for the construction of the Pioneer Industrial Estate at Walvis Bay. He also said a further N$893 million would be made available for the same project for 2015/16, while another N$611 million would be set aside for the development of an automotive and automotive spare parts.

According to the documents, the industrial park would accommodate industries specializing in auto and spare parts; a high-value beef processing facility; beef export facility; value adding facilities for textile; wool; pelts; silk and wool; steel processing; manufacturing of metal products and the manufacturing of a variety of building materials and furniture manufacturing, pharmaceuticals and cosmetics. The lack of space, according to the Namibia Manufacturers Association chief executive officer, Ronnie Varkevisser, has left their members fighting for shelf space with retailers especially those from the South African market. Varkevisser said the association has 153 members who contribute to both the primary and secondary sectors.

They are into basic metals and fabricated metal products as well as other non-metallic mineral products such as rubber and plastic, coke refined petroleum products, pharmaceuticals and toiletries, pulp, paper products publishing and print, wood and wood products, leather and leather products, textile products as well as food and beverage products. Varkevisser said most Namibian producers often pay very high prices to have their products on foreign shelves whenever they export to warehouses in South Africa, where the goods then return to Namibia with a ‘PROUDLY SOUTH AFRICAN’ sticker.

Growth at Home Strategy

Over the years, Schlettwein has been at pains to push for implementation of the Growth at Home Strategy and value addition to enhance economic growth. Schlettwein, however, refused to answer questions sent by The Villager this week regarding the issues he pushed as the trade minister. The Villager wanted to know what happened to the idea of industrial parks in Namibia that were supposed to have been built by the government and the Chinese. The other question was whether the Growth at Home Strategy was working

. Schlettwein referred The Villager to the industrialisation, trade and small to medium enterprises minister Immanuel Ngatjizeko. “We wish to refer you to the Ministry of Industrialisation, Trade, and SME Development, who are the line custodian ministry as per your questions,” Schlettwein said an emailed response. This is despite that he used to speak passionately about how Namibia with all its abundant natural resources, will not successfully grow its economy if the country does not start implementing its industrialisation policy in earnest.

However, in his foreword to the 2015/16 annual report for the industrialisation ministry, Ngatjizeko said they have put in place the requisite legal and regulatory building blocks to fully industrialise Namibia. “Our strategic objectives are therefore to promote the country’s manufacturing activity; to grow and diversify our exports and export markets; and to promote the growth and development of our SMEs,” he said.

The report titled Growth at Home says that the ministry had approved 15 companies and assisted four with various interventions ranging from technical assessments, coaching and training, products development, market exposure and equipment purchases.

According to the report, N$36, 2 million had been used to help 895 SMEs to acquire machinery and equipment under the Industrial Upgrading and Modernisation Programme to improve the production and supply capacity, efficiency and export competitiveness of local enterprises.

Furthermore, the report says five SME parks were built under the sites and premises development programme at Okakarara, Ruacana, Keetmanshoop, Onethindi and Grootfontein to enable business operations. Because all these projects were completed during Schlettwein’s time at trade, The Villager wanted Ngatjizeko to say what he has done at the ministry ever since he took over regarding progress on what was laid down for him.

Ngatjizeko said industrialisation will depend on resources – financial and manpower-wise. “We think we are going to do our best in order to industrialise. Whether we will succeed by 2030 will depend to what extend we would be industrialised,” he said. He did not, however, say anything about the Growth at Home Strategy.

But Varkevisser said the loopholes in executing the Growth at Home Policy range from lack of incentives to local manufacturers and producers to lack of state support on foreign trade policies in countries that Namibia ex ports to. He cited the challenges faced by Namibian salt producers in Brazil where there is a 25% marine tax, which despite efforts to have it removed by Namibia came to naught.

“We are constantly advocating to government through the industrialisation ministry and Namibia Trade Forum as well as other stakeholders to push high level delegation discussions with the retailers who are not yet supporting any local manufacturer and thus execute the “Retail Charter” initiative so that they can start purchasing local products?” Varkevisser said.

Infant Industry Protection

The other thing Schlettwein defended was the adoption of the policy and regulatory measures regarding the protection of the infant industries. So far, between 2013 and 2014 Namibia has instituted infant industry protection (IIP) measures on agro-processing sector and specified poultry and dairy products.

It is not clear whether these measures are still in place since the presidential advisor in charge of policy implementation, Penny Akwenye could not Speaking in the National Assembly on 14 February 2014, Schlettwein said the primary reason was to preserve and nurture the economic and industrial growth and in turn accelerate job and wealth creation and to equalise wealth distribution by cushioning and creating policy space for existing economic value chains to get off the ground and build the requisite competitive capacity.

“The global trading system poses a harsh environment for small developing countries. The cost of access to the global market has been to give up policy options through which to support, protect and nurture industries until they are sustainable and competitive,” he said. He pointed out that there are massive subsidies paid by the developed economies in especially the agricultural and agro processing sectors, which continue to distort markets and make it very difficult for developing economies like Namibia’s to develop and industrialise.

Schlettwein further said that for Namibia to overcome low growth, poverty, high unemployment and income inequality, requires a paradigm shift and real restructuring and transformation of the economy. “In particular we need, on one hand, to transform the economy from its heavy reliance on the production and export of raw material commodities and, on the other hand, to become an industrialised economy where manufacturing, innovation and the development of value chains assume the centre stage.

“We are able to add value to our resources and to produce some of the consumer goods that we import in large quantities. Vision 2030, the current national development plan (NDP4) and our national industrial policy provide a sound framework for targeted action to bring about sustained and high levels of economic growth and employment, wealth creation and income distribution and equality,” he said. Addressing the Growth at Home conference in Windhoek in 2013, Geingob, who was the premier then said: “In today’s ever-changing economic and political global environment, the importance of an effective domestic law to safeguard our ownership and management of strategic natural resources cannot be overstated.”

Doubts abound

DTA president McHenry Venaani said they have not yet started with the first phase of industrialisation. “First and foremost, we have to identify key-sectors in which we want to industrialise. By so doing you create the necessary human resource capacity to be able to venture into those sectors. “So you can’t industrialise without human resources and we have not created that. I do not think we will make it in less than 13 years. There is no clarity. You start with value addition and processing. All countries that have moved towards industrialisation have achieved value addition. I do not think we are running the race at full speed. We still have a lot of work to do. It’s just political rhetoric,” he said.

Opposition member Lukato Lukato said there is a lot of corruption going on from the top to the bottom of gov ernment and that Vision 2030 will not be likely. “Government is spending a lot of money on foreign trips, taxpayers’ money which should have been invested towards attaining the industrialisation vision. “What happened is that when they misused a lot of money and when they discovered that they have no money, they simply stopped the Industrial parks project,” he said. University of Namibia economic analyst Roman Grynberg said the Chinese have put up industrial parks in Zambia, Ethiopia and in Mauritius, but with the exception of Ethiopia there have not been much success. “In Zambia again the project has not been that bad but it has not been a great success. It would be nice working with fellow African states to build industrial parks here but who? Who can you recommend? Rwanda, Burundi, Burkina Faso, Cameron plays good football, nobody has that money,” he said.

The Villager Newspaper sought comment from Finance Minister Calle Schlettwein, National Planning Commission Minister Tom Alweendo who could not comment. The Villager also efforts to reach Tarah Shaanika whose phone was unreachable while Swapo SG Nangola Mbumba preferred not to comment.