Namibia: AfCFTA Could Boost Namibia's Economic Diversity

If Namibia's trade account was an investment portfolio, analysts would say it is too concentrated, risking collapse if the country's trading partners experienced setbacks.

All hopes are now pinned on the African Continental Free-Trade Area (AfCFTA) to diversify this portfolio and ensure sustainable economic growth for the country.

An analysis of Namibia's trade flow shows it is dominated by a few countries and trading blocks - and only a few of those are African.

The latest trading statistics for October 2020 saw the country's total merchandise trade reaching N$19,2 billion - this is 6,7% higher than the N$18 billion recorded in October 2019.

The N$19,2 billion comprised N$7,6 billion in exports and N$11,6 billion in imports.

Due to a lack of industrialisation, Namibia cheaply sells its raw material and unfinished products, minerals and frozen fish to countries that can convert them into finished products.

"The country's small manufacturing base automatically makes it a net importer of manufactured products and capital goods," the Namibia Statistics Agency (NSA) indicated in its annual trade compilation.

This causes Namibia's exports (of raw materials) to be worth less than its (manufactured) imports.

Some of the countries that have been taking advantage of Namibia's inability to add value to its resources are China, South Africa and Spain.

Most of the countries trading with Namibia do so for its minerals, with Spain enjoying Namibia's rich marine resource.

China sneaked onto the list of the country's top-five export destinations around 2017, when Switzerland, which used to be Namibia's top export destination for copper, reduced its imports by 51%.

In 2018, China took over as the country's top destination for raw copper and kept expanding with the takeover of some uranium mines.

With the help of the agriculture and environment ministries in issuing harvesting permission in the two Kavango regions, China has now expanded to timber.

South Africa imports live animals, fish, and gold from Namibia to manufacture products that Namibia imports again, trade statistics show.

According to the NSA, South Africa remains Namibia's top supplier of merchandise.

The AfCFTA hypothetically now presents Namibia with an opportunity to find different markets with the potential for the removal of different tariffs on various products.

In 2019, The Namibian highlighted that local fishing companies struggled to export fish to the Democratic Republic of Congo (DRC) using inland routes.

The companies said their cargo trucks stop at the border between Zambia and the DRC, and fish has to be transported into the DRC with small trucks that are not well refrigerated.

Alternatively, fish is smuggled into the country on bicycles, on which customs duties are less.

This forces horse mackerel companies to use Atlantic sea routes, even though their primary market is the DRC, to avoid parking their cargo at the border.

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