Nam looks at manufacturing for economic growth

By Magreth Nunuhe

WINDHOEK – Namibia will be shifting its new economic transformation to focus on manufacturing and exporting finished goods, as opposed to the current situation were it mainly exports raw material.   

This comes after the country’s government launched its fifth National Development Plan (NDP5), which will be dictating the country’s direction for the next five years.

Launched, last week, a key aspect of the new national development plan is the focus on setting up industry to enable the country to start trading in finished products for the next five years.

The plan targets the sectors such as mining, agriculture, fishing, steel manufacturing and the automotive industry, as focus areas for manufacturing and value addition.

NDP5 is Namibia’s immediate development plan, derived from the country’s long-term plan, Vision 2030.

Raw material currently represents 67 percent of Namibia’s total exports. The plan therefore considers it crucial for the country to invest in value addition, to its natural resources before exportation. Value addition in the form of agro processing and fish processing would create employment and increase income distribution in the economy.

NDP5 also aims to achieve an inclusive, sustainable and equitable economic growth; build capable and healthy human resources; ensure sustainable environment and enhance resilience; and promote good governance through effective institutions.

Among its highlights is government’s ambition to create 200,000 jobs, in the secondary sector, over the five year period. Other jobs are expected to be created by the construction sector.

The plan is for government to encourage local procurement of goods and for large private companies to support the local industry development and competitiveness by providing local market access that can benefit the economy in reducing the import bill, improved balance of payments and employment creation.

During the next five years, the Government of Namibia is planning to accelerate Micro, Small and Medium-sized Enterprises (MSME) by providing government-sponsored services to support and incubate new businesses and undertake deliberate and sustained intervention focusing on government procurement as well as a set of requirements for local retailers to provide dedicated shelve spaces for local products.

This is with the desired outcome to increase MSME contribution to GDP from 12 percent to 20 percent by the year 2022. In the manufacturing sector, the government would like to see contribution from that sector to GDP to increase from R17.8 billion in 2015 to R20.6 billion or 60 percent of GDP by 2022.

Areas that have been identified as crucial to the structural transformation of the manufacturing sector are diversification of the economy, sophistication of exports (value addition) and good governance that protects a sound investment climate and business environment.

When it comes to agriculture, Namibia would like to see food production increase by 30 percent, while the proportion of food insecurity individuals drop from 25 percent of the country’s population in 2016 to 12 percent of the country’s population by 2022.

Agriculture contributes only 3.8 percent to GDP, but its significance cannot be underscored as it supports above 70 percent of the Namibian population, employs about a third of the country’s workforce and addresses food security and livelihoods.

The fisheries sector, being the third largest income earner, contributing about 15 percent of the country’s total exports is desired to increase its volumes of fish handled, canned or processed in Walvis Bay cumulatively by 40 percent.

This can be done through enhancing market access, encourage fish importation  to achieve economies of scaled, develop retail ready products in the hake and other white fisheries such as monk and achieve sustainable value addition to products such as horse mackerel.

Mining currently contributes 12 percent to GDP and the desired outcome in the NDP5 is to have an integrated mining industry value chain with double the share of the value added mining exports by 2022.

However, there remain significant challenges in the key sectors of economic activity in agriculture, fisheries, tourism, manufacturing and services, which are primitive, informal and limited.

This is owing to lack of skills, lack of economies of scale, dominion of foreign players in retail supply, among others.

To strengthen this, Namibia needs to improve labour productivity through training, increase production at the primary level to improve both local value addition and job creation and develop a comprehensive economic incentives framework.

Namibia also aspires to achieve an average growth of 5 percent and move from an input dependent economy into a knowledge-based economy, where investment will also be made in research and development, skills development and diversification of economic activities.

June 2017
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