…Global trade shockwaves and how Namibia needs to shape defensive policies
The global trade for goods exports plummeted by 36% in 2015 while imports decreased by 16% and there is a need to fast-track strong domestic policies to support the local economy to restrain global shocks. In 2016, trade is literally “walking on thin ice” because the year can presumptuously turn out much worse because of prevalent socio-economic shockwaves all over the globe. In this post, we look at our domestic economy’s stance on how to survive and structure businesses to escape meltdowns and all kinds of hazards. Most transformative policies in Namibia are “work-in-progress”, apart from the Retail Sector Charter by the Namibia Trade Forum launched recently, thus by the time we open our eyes it will be too late to think of policy. The global economy is fast moving and is not a friendly place for poor-quality policy making, we apply rescue plans for mega enterprises but are not well prepared on issues pertaining to the structuring of small enterprises. When Mauritius faced a crisis in textile trade they had to apply fast remedies to reduce the harm on the trade position, they established their services sector and declared more EPZ ‘zones’, the Singapore government clinked to services sector and Ireland resorted to good industrialisation boost.
Trade and economic policy is a lifeline for domestic companies and is effective enough to grow economies and secure trade. Growth at Home alone cannot succeed in isolation but it needs a financial boost and financial partners like SME Bank and DBN and other willing commercial banks that will coach and fund start-ups. The current trade regime needs to zoom into global success stories for example China cartelised their regional companies and although they are a big economy they manage to thrive in succinct ways. They apply composure in value chain inclusion, comparative and competitive segmentation, etc. In Namibia, our business and commercial sector is fragmented to a level where structure-based reform only involves a few entities. The Ministry of Industrialisation, Trade and SME Development needs a flexible and active research and communications departments to create awareness of trade strategies and policies to effectively address marginal calls during trade spin-offs. Lack of coherence widens the policy gaps. Reliance on business intelligence platforms is also long overdue for many policy makers and government institutions in order to pin-point and filter gaps in skill-sets, financial needs, resource needs of the SMEs.
It is also paramount for businesses to align themselves with domestic, regional and international trade agreements. Trade policy widens the space to eliminate binding limitations and cross-border red-tape. This will take two approaches, what we call a double-edged sword. One is to reduce the trade deficit in goods and services and secondly expand the domestic market revenue pool. If the local economy does not grow then all efforts of policy will end up as cosmetic, if there is no coherence then interventions will just increase a structural bias. As I mentioned earlier, the Chinese government injected huge savings through state funded capitalism and interventionist systems to enrich their economy especially in construction. These state-owned companies embraced the springboard of cartelisation because in every economy the government remains the big-money-spender. Many Chinese engineering conglomerates carry the vision of their vibrant youth forward and create employment in a highly competitive global economy for them, this is ideally a good model for market penetration and exposure, this is a fertile ground for state funds to flourish and reap. We need to re-evaluate if the model of youth empowerment will work if Government policies can be shaped to incubate youth ideas, why because they are resilient, energetic and innovative.
There is need for our government to subsidize SMEs by providing free or cheaper land, especially if they have proven themselves as viable after years of existence. Botswana experienced GDP growth as high as 8.6% in 2010, we swerved around 6% and now 4%. Our next door neighbour South Africa has capitalised on all our fragmentations because they crafted these loopholes that we are stuck in. Like the Bible says we need an Exodus to guide us out of economic oppression and this needs progressive and active “now-policies”.
Rodney Dan-Ao !Hoaeb is a trade and investment researcher committed to seeing a radical economic shake-up in Namibia.