By: Dwight Links
A recent report on Namibia’s realistic approaches to economic transformation states that dependence on a single sector may be detrimental. Providing a clear picture of how this transformation could be achieved, Clovis Freire, Chief of the Commodities Section under a division within the UN Trade and Development (UNCTAD), outlined certain recommendations in the report on Namibia.
“Namibia, as we know, is one of the 95 developing countries that are commodity-dependent. Namibia forms part of a cluster of nations from Africa, South America, Central Asia and more,” Freire explained.
He noted that such dependence could expose a nation – especially a developing one – to various risks, including “being vulnerable to price volatility of the commodities. If the price goes up, everything is okay, but when it goes down it becomes a problem.”
The report, ‘Namibia’s Rapid Assessment of Value Addition and Diversification Within and Beyond the Critical Energy Transition Minerals Value Chain’, states clearly that the country is too dependent on primary sectors like mining for its fortunes.
“Namibia’s economy remains highly dependent on a narrow set of primary exports, exposing it to external shocks and volatility, underscoring the importance of productive diversification for economic resilience,” the report states.
OPTIONS HIGHLIGHTED
Freire noted that one of the only manners in which Namibia could achieve its industrial objectives would be to identify areas of diversification.
“This report identifies potential new products for diversification that complement existing
productive chains in Namibia, considering installed capacities and global trends to attract investments,” read the report.
Covering opportunities within and beyond the critical energy transition minerals (CETM) value chains, the report indicates that diversification would identify said opportunities.
“The analysis derived from the economic complexity and product space approach [that] identifies 353 products across 23 sectors, including chemicals, iron and steel, and machinery and mechanical appliances,” outlined UNCTAD about their analysis.
Additionally, UNCTAD identified 60 opportunities outside of the CETM value chain, mainly to articles of copper and other minerals present within the mentioned sectors.
“This means a broader set of opportunities identified beyond the CETM value chains contributes to the accumulation of industrial capabilities – such as process engineering, standards compliance, and manufacturing know-how – that facilitate further diversification and upgrading within CETM value chains over time,” expands the report.
This translates to a picture where, under a global export scenario, 200 products are identified with a weighted opportunity of US$811 million. Of this larger set of goods, 33 products are in the critical minerals’ value chain. Valued at US$221 million, it features both forward and backward linkages, with top export markets by size in China, South Africa, and France.
“The export opportunities are assessed through a monetised overlap index, which estimates the potential for new products to enter expanding import markets, based on an average increase in imports of the product in the target market in the previous five years for which data is available. This measure calculates the degree to which one country’s potential new exports align with another country’s growing import demand,” motivates UNCTAD.
ECOSYSTEM COORDINATION
According to the report, foreign companies dominate the ownership and investment spectra, particularly in exploration and extraction, while domestic participation – mainly through state-linked entities and community trusts – remains limited.
Touching on the limited domestic influence in a more positive light, the report speaks to how “Government ministries provide regulatory oversight, with substantial contributions from academic institutions in skills development and research. Civil society, trade unions, and environmental, social, and governance-focused platforms are increasingly active in monitoring environmental and social impacts.”
Overall, the report indicates that Namibia’s governance and institutional landscape has become more robust, but more work needs to be done.
“Strengthening local ownership, downstream development and integration, and multi-stakeholder coordination will be key to enabling benefit-sharing from the critical minerals sector and to support the ongoing deepening of domestic capabilities across other industries,” the report concludes.
