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Tuesday 15 October 2019
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Address supply-side constraints and integrate Namibia into global economy

The study by Klaus Schade of the Institute of Public Policy Research (IPPR) titled “ African Growth and Opportunity Act: What It Means for Namibian Businesses (2019)”, revealed that the value of goods exported to USA under this Act’s preferences has been low or the exports were once-off arrangements in a particular year. The African Growth and Opportunity Act (AGOA) was enacted in 2000 by the United States Congress to provide improved access to the United States market for Sub-Saharan African States under the system of preferences. Namibia could have used this opportunity to diversify its export destinations.
Namibia enjoys favourable access to many markets. Namibia is a member of the Southern African Customs Union (SACU). SACU allows Namibia duty-free access to markets of member States. The country enjoys free access to the markets of the Southern African Community (SADC) member States. Recently Namibia ratified the African Continental Free Trade Agreement. The Economic Partnership Agreement with European Union provides Namibia duty-free and quota-free access to the EU market. The country is also a member of the European Continental Free Trade Association. Through MERCOSUR, Namibia has access to the South America markets. In addition to AGOA Namibia secured access of its beef and grapes to USA market. China has also provided access of Namibian beef to the Chinese market through Hong Kong.
In terms of trade, Namibia’s limitations are the supply-side constraints. Currently Namibia’s export structure is dominated by minerals, fish, beef and grapes. Namibia has a limited capacity for manufacturing. Namibia is described as an open economy with a small population of 2.4 million people. Due to high levels of unemployment and unequal distribution of the national income within this small population there is limited buying power in the country. Namibia could therefore only expand its economy by developing a strategy of export driven economy.
In 2011 the United Nations Development Programme (UNDP) assisted the Ministry of Trade and Industry to produce a document titled “… Integrating Globally: Namibia’s Aid for Trade- A Framework and Strategy”. The document was a framework aimed to help Namibia to effectively leverage trade for economic development, growth and human resource development. The document analyzed the country’s trade capacity development needs and priorities. The document identified capacity related constraints as well as the organizational limitations.
The document stressed the urgent need of strengthening the capacity of the Ministry of Trade and Industry to articulate, coordinate and address trade and development related needs and priorities. The document specifically recommended a number of measures to be taken. These included developing the capacity for trade facilitation by improving the Custom’s capacity to effectively and efficiently manage trade flows.

 

With regard to the promotion of foreign investment and trade the document recommended that the incentive structure to promote foreign investment and trade should be closely aligned to the national economic development agenda and should contribute to the expansion of Namibia’s trade capacity. The role of the Small and Medium Enterprises (SMEs) in promoting inclusive growth was emphasized. The lack of specifically designed trade financing instruments for small and medium traders has curtailed the country’s potential to diversify its trade portfolio and in making trade more inclusive .
Export market information is very important for a country which aspires to make its economy export driven. Namibia should therefore develop its capacity to understand and articulate Trade Rules. In this regard the document recommended the establishment of a market information hub.
Above all, the country should strive to build the nation’s productive capacity. Through public-private collaboration the country should leverage synergies to increase the productive capacity. Investment promotion is critical to integrating the economy into global value chains. This will enable local manufacturers to access finance, technology and expertise. The Business support services are crucial for the startups.
Namibia is strategically located along the Atlantic Ocean. The ports of Walvis Bay and Luderitz  could serve as trade transit hubs for the regional markets in Southern Africa. It is encouraging that a number of Corridors are being promoted to make the Walvis Bay a regional port of choice. This will strengthen the position of Namibia as a leader in trade in services.
That Namibia has free access to many premium markets, the country should develop a robust economic and trade policy to exploit these opportunities. The attempts to focus in inward looking policies such as ‘Growth At Home’ should be resisted. Namibia should truly be an open economy with a focus on export driven production. This could only be achieved by building the productive capacity of the economy. In this regard Namibia can position itself as a gateway to African and global markets.




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