Namibia to Feel the Pinch of South Africa's Unrest

Members of the South African Defence Force on the ground in Alexandra on July 13, 2021.

FROM January to May this year, Namibia has imported N$17,1 billion worth of goods from South Africa, data from the Namibia Statistics Agency show. And this is expected to be disturbed by the current unrest in the neighbouring country.

This translates to about N$3,4 billion every month.

During the same period Namibia has sold goods to South Africa worth N$4,8 billion - roughly N$952,9 million a month.

Trade and economics experts call this a rather "cozy" relationship between the two sovereigns and highlights Namibia's dependence on South Africa for basic supplies.

With the recent unrest, during which businesses were looted and shops set alight, expectations are that this would impact Namibia negatively.

Market disruption has become the norm in the past five years, having a severe impact on the free flow of basic goods, such as food and medical supplies, to Namibia.

The prices of basic goods normally increase immediately after unrest in South Africa.

The Namibian has asked various experts and government technocrats responsible for enhancing the country's production capacity whether the possibility of becoming less reliant on the neighbouring country for the importation of goods and services is a possibility.

Some say Namibia is still unable to sustain itself.

Senior economist Omu Kakujaha-Matundu says Namibia's small market has been a hindrance to developing the manufacturing sector.

A small market makes economies of scale almost impossible, he says.

However, this issue could be solved through export markets producing quality goods to compete with similar products in other markets.

That would, however, depend on government institutional support, Kakujaha-Matundu says.

"How much support do government-supported SMEs have to realise the quality and scale needed for SMEs to grow and become sustainable? Yes, there has been some, but overall it has been half-hearted support," he says.

He says the slow progression in reducing dependence on the neighbouring giant is because "our government was cozy in the arms of South Africa".

Kakujaha-Matundu says the Southern African Customs Union agreement is a beauty and a beast at the same time, due to its asymmetric relationship, making "the four other economies South African-captive markets".

He suggests that some unpopular policies, which at times could be to the detriment of the consumer, should be undertaken.

He warns that disadvantaging consumers should not be perpetuated by supporting a small clique of producers.

"A clear plan or road map with sunset clauses is needed," he says.

The executive director of industrialisation and trade, Michael Humavindu, says Namibia has not been reluctant to develop her productive capacity.

"Various efforts are evidence that we are trying to industrialise. In the Southern African Development Community we are the only country, along with South Africa, to be classified as an efficiency-driven economy, while the rest are still factor-driven," he says.

He says the country's next stage would be innovation-driven economies.

The factors restraining local industrialisation are well known, Humavindu says.

"We need to innovate around those to improve our production capabilities," he says.

Humavindu indicated that the logistics platforms that enable regional trade would be severely impacted by the current unrest in South Africa, and that Namibia should tighten up.

"We should not only expect some price impacts going forward, but limits also in the actual on-time delivery of key goods, such as medical supplies," he says.

On the positive side, Humavindu says contractual savings are indeed a good source of directing capital to productive development investments.

"We, however, need to think more creatively about how we should do that," he says.

Humavindu says merely giving funds to private equities would not guarantee capital for productive investments.

Namibia Investment Promotion and Development Board (NIPDB) head Nangula Uaandja says Namibia's dependence on South Africa is concerning.

She says the relationship has clear opportunities where Namibia can start setting up industries that would not only benefit the country, but also Africa at large.

Uaandja says from an economies-of-scale point of view, it would be very costly for Namibia to set up industries that would serve the country only.

However, with various opportunities offered by access to other markets and the country's geographic location, "we should be able to bring about some necessary changes in the structure of our economy".

That is why the government is forging ahead with its logistics hub project, which is spearheaded by the National Planning Commission and the Walvis Bay Corridor Group, she says.

The establishment of the NIPDB to promote private sector-led growth, green hydrogen projects, and the appointment of the Harvard Growth Lab are some of the activities that could enable the restructuring dream, Uaandja says.

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