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Wednesday 16 January 2019
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Uphill battle for local retailers

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Key objectives of the retail charter:
  • Encourage local manufacturing through increased local sourcing
  • Developing local value chains
  • Assisting in creating and maintaining jobs
  • Stimulating overall economic growth

Namibian retailers continue to have it tough in their own country with space on retailers’ shelves a mere pipedream for many, some now pin their last hopes on the recently launched Namibia Retail Sector Charter. Although the charter does not bind any of the retailers to sign up, government warned that if things fail to improve it will be left with no option but to intervene and take corrective measures to aid localretailers to also have their footprint in the local retail sector. The retail sector – the second highest employer after the agriculture sector – with a contribution of 11% to the country’s GDP is expected to increase with the coming of the retail charter. The charter can also go a long way in addressing the country’s unfavourable trade balance, to which the retail sector also heavily contribute because of the high importation of retail products.

Last year Namibia recorded the highest trade deficit in the last decade amounting to N$39.2 billion, according to the Namibia Statistics Agency’s 2015 Annual Trade Report. Through the charter, Government expects the stocking of Namibian products to increase to 20% on retail shelves. Namibia’s Trade Forum says the primary objective of the charter is to grow the manufacturing sector through, amongst others, easy access to the retail sector. The forum’s Chairperson Gideon Shilongo made it clear at the launch of the charter recently that the recent urge to support Namibian goods and products should not be viewed as a measure aimed at elbowing foreign retailers out of Namibia.

Despite the formulation of the charter, Shilongo said the status quo of foreign retailers eating a huge chunk of the retail cake in Namibia will remain intact if Namibians fail to support local products. “We must produce enough goods for ourselves and also for export purposes. We must also work towards a situation where our retailers produce so much that they can also open retail outlets in other countries,” said Shilongo. Crafting good policies and frameworks has been a hallmark in Namibia since independence, but such commendable efforts often ends up in the dustbins instead of benefitting the country due to poor implementation. This situation is prevalent in both the private and public sectors. This led to Fast Moving Consumer Goods (FMCG) chairperson Henry Feris cautioning that the launch of the charter is only the beginning of a bigger test.

“Let us take hands for the successful implementation [of the charter] so that we can in years to come look back and not only witness a successful implementation but a prosperous Namibia with a strong economic home base,” urged Feris. Because of the favourable domestic macro-economic environment, Namibia to a great extent managed to lure foreign-owned retailers. But with the influx of foreign-owned retailers over the years, Government has become worried that the situation – if continued to persist – will negatively impact local retailers. “This has seen the displacement of the local small artisan bakeries, florists, butcheries and small family owned  mini markets by the big retail shops mostly from South Africa and smaller retail outlets of Chinese origin,” said a worried Minister of Industialisation, Trade and SME Development Immanuel Ngatjizeko at the launch last week. According to Ngatjizeko, the situation has resulted in limited participation of Namibians in the retail sector and its supply chains and snubbing of local products.

The minister expressed concern over such a setup because it does not optimally contribute to the Namibian economy because goods that are   being consumed are imported. “Should we observe that very little or no progress is apparent after a set time, the department of Commerce in the Ministry is fully mandated to regulate domestic trade matters and steps will be initiated towards     legislation,” warned Ngatjizeko. Although some retailers have in recent years softened their stance on local products by offering them space on their shelves, the biggest challenge continues to be the lack of consistency in quality and quantity of some locally manufactured goods. No one ever started off perfectly said Ngatjizeko, but also challenged manufacturers to keep in mind that the health and safety of consumers cannot be jeopardised, hence they must constantly meet the set minimum standards.

Despite efforts to narrow the trade deficit, clearly the measures taken are not fruitful because last year the trade deficit widened as expenditure on imports expanded by 6% while export revenue dropped by 9.8%, with the retail sectors being one of the main contributors. Expenditure on imports rose up to N$97.6 billion, from N$92.1 billion in 2014, as spending on mineral fuels, electrical machinery, copper ores and articles of iron or steel improved. The increase came amid times when the overall value of exports fell to N$58.4 billion last year from N$64.7 billion in 2014. NSA contributed the export droppings to lower sales of minerals such as copper ore and zinc and vehicles. Namibia’s trade balance averaged to a deficit of N$11 billion from 2006 till 2015. In fact, in 2006 it was all smiles when the country recorded an all-time high with a surplus of N$2.6 billion, but since then things have been on the downside.

 




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