Namibia: Minimal Value Addition Widens Trade Deficit

THE minimal, lack of and slow industrialisation continues to widen the country's trade deficit, with Namibia spending billions of dollars in importing manufactured goods from outside and exporting raw materials.

This observation follows the release of the Namibia Statistics Agency (NSA)'s second quarter trade statistics last week, showing that in the second quarter of 2019, the country spent N$27,2 billion on imports compared to N$23,4 billion earned from exports. This resulted in a N$3,7 billion deficit.

This is recorded on the trade account, a record of all transactions of merchandise between Namibians and the rest of the world.

The trade account measures the value and quantity of goods entering (imports) or leaving (exports) its economic territory.

The 2019 second quarter deficit became the 10th quarter since 2017, of the excessive import and lower export as the country struggles to add value to its resources.

Statistics indicate the average growth of the deficit over the 10 quarters as standing at 52%.

NSA attributed the persistent deficit as mostly driven by Namibia's high demand for high-value manufactured goods and industrial machinery from the rest of the world as opposed to exporting raw unprocessed materials, specifically minerals.

The biggest contributor to the deficit is South Africa, from which Namibia incurred its largest deficit in the second quarter of 2019 with N$8,9 billion, followed by Zambia with N$3,6 billion.

Despite these deficits, surpluses were recorded with countries such as China, Belgium, Botswana, Spain, and Bahamas during the same period.

DESTINATIONS

During the three-month period under review, the country's exports (58%), mostly raw materials, were destined for China, followed by South Africa, Belgium, Botswana and Spain.

China was the largest export destination, with 20,1% of all exports, with South Africa in the second place accounting for 16,6%.

The country's exports to China experienced the largest growth of 48,9% (N$1,5 billion) to N$4,7 billion up from N$3,1 billion recorded in the previous quarters. The trading is mainly in minerals (copper, ores and; natural minerals and stones).

Exports to Spain are dominated by fish, ores and zinc. South Africa took up most of Namibia's live animals, fish and beverages.

Exports to Botswana slipped to N$1,8 billion after recording N$2,4 billion in the corresponding quarter of 2018.

The decline experienced in exports to Botswana was witnessed in the value of precious stones and metals; as well as oils and mineral fuels.

SOURCES

South Africa, Zambia, China, Bulgaria and Chile took advantage of Namibia's inability to add value and manufacture most of its basic goods to provide the most needed imports for the domestic economy.

Together, these countries accounted for the largest share of Namibia's total imports (74,8%).

South Africa accounted for the largest share (47,3%) of the imports into Namibia during the period under review. As a result, it was ranked as Namibia's largest import market during the second quarter, followed by Zambia, which contributed 16,4% of total domestic imports.

Animal feeds, copper and pharmaceuticals were responsible for the high growth in imports from Zambia, as the import bill for animal feed rose by 92,9% to N$68 million in the second quarter of 2019 from N$35 million recorded in the second quarter of 2018.

On the other hand, the rise in imports from South Africa was mainly attributed to the high domestic demand for plastics (56,5%), oils and mineral fuels (62,8%), motor vehicles and parts (19,2%).

Namibia's industrial policy stipulates that by the year 2030 export of value-added products should account for 70% of total exports.

The policy intends to ramp up the portion of value-added exports during the first phase of the 'Growth at Home' strategy (2016) to reach 50% by the end of 2030.

Subsequently, the policy aims to push the country's value-added exports to increase by 10% every 10 years to reach 70% by the year 2030.

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