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Tuesday 28 January 2020
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Towards a positive trade balance for Namibia

On 19 November 2019, the Namibia Statistics Agency released the 2nd quarter trade statistics. The figures show a widening trade deficit experienced during the last three months. The total exports during quarter 2- 2019 stood at N$ 21,887 million.
The imports value during the same period was N$ 27,362 million. The trade deficit was minus N$ 5,475 million. The terms of trade were unfavourable for Namibia. The trade deficit was caused mainly by low value of exports as well as by low demand of precious stones.
The value of exports are said to have deteriorated by 1.7 percent. Primary commodities such as raw minerals were of low value compared to imports of manufactured commodities and industrial machines.
During the quarter2-2019, Namibian exports were destined for China: 20.1 percent; South Africa: 16.9 percent; Belgium and Botswana: 7.8 percent and Spain: 5.9 percent.
The main export commodities were copper, mainly re-export of Zambian copper, fish, ores, live animals, beverages, natural minerals and stones.
Copper exports were valued at N$6,028 million; precious stones and metals : N44,545million; fish: N$2,904 million; vessels and boats : N$1,721 million. These commodities made up 76.2 percent of exports.
The annual value of these export commodities is reported to have declined by 8.5 percent as compared to 2018. Fish export ,however, remained a major foreign exchange earner.
Fish accounted for 11.5 percent of all the goods exported to the rest of the world.
The revenue generated from the export of fish increased from N$2,585 million in 2018 t0 N$ 2,691 million recorded in quarter2-2019.
From the Regional perspective, the European Union received 24.9 percent of the Namibian exports; SACU: 24.4 percent; BRICS 20.8 percent; SADC-Non-SACU: 8.2 percent; COMESA: 7.8 percent and EFTA: 0.7 percent.
The deterioration in Namibia’s terms of trade is a matter of concern. The situation demands urgent attention from policy makers. Namibia should strive towards a positive trade balance.
This can only be achieved through what Reda Sherif and Fuad Hasanov of IMF termed: A “True” Industrial Policy ( The Namibian, 22 November 2019).
Such an industrial policy requires that the Namibian government should intervene to support the domestic  economy to leverage technologies in support of production.
The policy should emphasize the promotion of research and development in support of new economic sectors which are focused on export. In particular Namibia should adopt a “ leapfrog” approach.
According to Sherif, et al, the leapfrog approach to trade policy, should be focused on attracting foreign direct investment with the view of leveraging technology and innovation.
The goal is, first and foremost , to boost production for export markets. In addition to attracting foreign direct investment, government should play an active role by enhancing public investment stimulus in support of domestic economy.
The State should became an “ Entrepreneurial  State” through the creation of conducive business environment and provision infrastructure as well as developing human skills.
Namibia has access to premium markets for its beef.
The quater2- 2019 trade statistics do not report any significant contribution of beef to exports. Farmers require government support to increase their throughput.
In particular, farmers need government support to produce high grade animals for export markets. The demand for beef in the Chinese market is enormous. There is however a supply-side constraint on the part of Namibia.
Here is a low hanging fruit in the export markets for Namibian farmers. I understand MEATCO is considering importing cattle from Botswana.
This will be an opportunity loss to Namibian farmers.
Another sector which has an untapped potential is the ocean economy.
With a coastline of 1500 kilometers Namibia has not fully exploited the potential of the marine economy.
The demand for abalone and similar sea food in the Asian markets is huge.
However, the investment required to invest in the production of such sea products is unaffordable by an individual producer. Incentives are needed to support entrepreneurs with good ideas. The Development Bank of Namibia can play a pivotal role here.
Namibia should pay attention to research and development if the country aims at leapfroging its development trajectory.
If Namibia has no capacity for research and development the country should strive to attract foreign firms which could bring technology, innovation and expertise.
The country should not watch its export value being eroded quarter-quarter. This may lead to serious problems in the balance of payment in the future.
The Namibia Statistics Agency has done its part to provide policy makers with relevant information.
Urgent action is required to boost Namibia’s export value in order to attain a positive trade balance.




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