South Africa’s exports dropped 23% percent in 2015 and lost 2 places in global ratings.
Manufacturing in South Africa dropped 2 places according to Deloitte’s Global Manufacturers Index, but what does this mean for Namibia?South Africa’s global exports dropped by 23% in 2015 alone and this can have dire shifts in growth and unemployment. However, there are positives and negatives on the Namibian economy as we are dependent on their exports. We are inclined to “big brother SA” and we tail to maximize National manufacturing, production or value addition.
My greatest desire is an “independent and sustainable economy” so that we don’t always have cash outflows. Their reduced global exports can harm their outlets and institutions elsewhere and our government will experience the effects through unemployment because of strong work linkages to South Africa. The drop will also affect services such as marketing, finance, transport, and other investments that South African entities made in SACU and SADC countries.
Since 2006, 95% of the imports from China within the SACU market went to South Africa, while Namibia, Swaziland, Lesotho and Botswana share a combined 5% imports from China. In the recent 5-year period (2011-2015), South Africa increased their value of imports from China by 93% difference compare to 2006-2010, clearly their focus is not cross border value chains, but to maintain a position of a “dominant regional importer”. I think this is “fresh awakening for making regional policies because they will not benefit us until we disaggregate real value chains.
This also means that South Africa is hanging on China’s strength and are very vulnerable to shocks that happen in China. South Africa must work on policies to empower our regions because their loyalty at the moment is questionable. The country with such huge imports need to embark on opening better export processing zones, tax free duty free stock or bonded stock, etc. to reduce unfair pricing.
For the first time in history, manufacturing sales are dropping in South Africa whilst imports are increasing and this can be due to the high presence of cheaper imported goods into the economy. The Chinese goods are accessible to the poor and these reduces the revenue from manufactured sales and I trust it reduces inflation. In Namibia CPI is ever increasing because we have lesser Chinese imports as compared to South Africa while South African retailers are very expensive in Namibia.
Other observations are that the unemployment rate is so high at 25%, higher than the inhabitants of other SACU members combined.
On the positive end, Namibian reduced Imports and the trade balance is favourable at the moment, mostly due to lesser Government projects and reduced government spending. The value of Namibian imports from the world dropped by 34% in 2015 and thus it is best to produce local goods. The result of this is also the catastrophic reduction of Angolan imports. Namibia’s import from South Africa also dropped slightly.
It is at our discretion to manufacture our own products because South Africa’s political climate is swerving and recently they imposed various remedial policies on SACU and we need to be on alert. This includes the recent steel industry remedies and the imposed meat livestock barriers.
Rodney Dan-Ao !Hoaeb is a Trade and Investment Researcher at the Namibia Trade Forum.