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We won't thumb-suck SMEs - Swartz

Fri, 21 July 2017 17:29

Chairperson for the recently inaugurated procurement board, Patrick Swartz said the new procurement bill will not favour Small to Medium business Enterprises unless they perform up to standard and remain consistent.

He said while the procurement bill has to be in tandem with the industrialisation policies of government, SMEs are in danger of not having their Namibian products procured if they also do not live up to what they are expected to deliver in the market. “They need to perform. We always hear, what are you going to do for us? The question is what are you yourself going to do to make sure that you participate and be in good standing and be able to deliver what you promised to deliver? That is what is critically important,” he said.

Swartz was responding to the Chief Executive Of?cer (CEO) for the Namibia Trade Forum (NTF) Ndiitah Nghipondoka’s question at a recent IPPR event on the New Public Procurement Framework workshop which queried on whether the procurement bill gives preferential treatment proudly Namibian products on the shelves of retail outlets.

 “We are busy working on the Retail Charter and young people, SMEs, nock on our doors asking whether this procurement bill will help them with the procurement of their products,” she said. However, when asked by NTFs Rodney Hoaeb whether a certain percentage had been set aside to carter for the poor and small businesses who may not be having the stamina to compete with bigger corporates for tenders, Swartz said that was not done.

“They are basically throwing shade on SMEs. The second thing is if we do not know how much we are going to spend on the poor then it means that they are faced with a big problem in the ?ght on poverty eradication,” said Hoaeb.

 Meanwhile the SMEs sector is tipped against products from South Africa which are often tagged with comparably cheaper shelf prices while proudly Namibian products often get “overpriced”. Although food and non-alcoholic beverages in?ation has come down by a double digit level from 11.3 percent in June 2016 to 4.6 percent in June 2017, Namibian producers still have to maintain a fairly higher price over foreign products for an ideally short time until they garner the needed demand. Experts are of the notion that although imported in?ation might make a contribution, this might not be the main reason why locally manufactured foodstuff are priced higher than imported competing products.

 “Economies of scale would be an important contributor to higher prices. Home market-size from where the imported processed food originates, is in all likelihood much larger than Namibia’s small domestic market. So producers in those countries have larger production runs. Resultantly, they gain an edge over Namibian manufacturers, with smaller production runs,” says SMEs Compete director and analyst Danny Meyer.

Namibian manufacturers still have to outsource most of the needed material from other countries while back home the cost of doing business is still high. “The cost of doing business is known to be rather high in Namibia as a result of small market size, distances for material or input transportation to the production facility and for ?nished product transportation to the market or consumer. Labour rates and the cost of utilities (power and water) are also on the higher side here, in comparison to other markets.

 So are company and personal tax rates,” says the SMEs expert. While Namibia remains an open market economy, it thus makes it easy for foreign producers to sell into the market making it dif?cult for GRN to drastically cut imports to stimulate local demand, Meyer says.

 “The only way for Namibian producers to become competitive, locally and beyond the country’s borders, irrespective of the sector of industry in which they operate, be it food, beverages, building material, garments, footwear, health and beauty products, furniture, etc., is optimization of production ef?ciency. Working very hard and extremely smart too,” says Meyer.