NEIGHBOURLY LOVE

Neighbouring Namibia is pulling out all the stops to improve trade with South Africa and SADC

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South Africa and Namibia’s warm and fraternal relations are historical and were well cemented during the fight against colonialism and apartheid. The two neighbours enjoy excellent bilateral co-operation and Namibia’s stability and interrelated economic ties with South Africa make the country a natural strategic partner for us. However the many possible trade opportunities between the two countries are not quite fully explored...

Bilateral co-operation between the two countries covers a wide range of fields. Significant progress in respect to the bilateral co-operation has been made over the years as evidenced by the existence of more than 70 signed agreements and memoranda of understanding. These agreements cover a wide range of areas including political, economic, social, defence and security co-operation.

To further strengthen ties, improve trade and doing business across the borders, the Namibian government has set a plan in motion to actively improve its business environment, including easing multiple-entry visa requirements for South African business, to encourage more cross-border trade and investment.Namibian President, Hage G. Geingob, told South African business delegates at the recent launch of the Invest in Namibia International Investment Conference, that was held in Windhoek earlier this month, that his government planned to remove visa restrictions hampering business travel to Namibia by South Africans.

“We are undertaking a number of ease of business reforms. Soon, all South African business people will be able to get multiple entry visas, and visas will be issued at the airport. Ultimately, the aim is for visa requirements to be abolished.” This move was in line with the government’s Harambee Prosperity Plan to reduce poverty and unemployment and accelerate development and industrialisation to uplift all Namibians.The launch of the Invest in Namibia International Conference in South Africa drew hundreds of potential investors seeking opportunities for investment and business partnerships with Namibia.

Themed ‘Promoting Investment for Inclusive Growth and Industrialisation’, the event presented investment opportunities in the areas of energy, agriculture, low-cost housing, tourism, manufacturing and infrastructure development.The High Commissioner, H.E. Veiccoh K. Nghiwete, led a delegation of South African businesses and investors to Namibia. Bonaventura Hinda, Commercial Counsellor at the High Commission, facilitated business-to-business meetings with Namibian companies and institutions during the conference.

Noting that the country had achieved peace and stability and recorded consistent improvement on all fronts, Geingob said: “We are now entering the second phase of the struggle—creating an environment conducive to inclusive economic growth.” This, he said, could only be achieved in win-win partnerships with neighbouring African countries such as South Africa.

The Namibian authorities who launched the investment conference noted that Namibia, with a GDP growth rate of 4.4%, rapid urbanisation, political stability and sound macroeconomic management, offered solid investment opportunities for businesses based in South Africa. Trade between South Africa and Namibia has increased steadily in recent years, topping R61 billion in exports from South Africa to Namibia and R11.4 billion from Namibia to South Africa last year.

South Africa is both Namibia’s top export and top import destination, with the country’s main exports including diamonds, livestock, meat, fish, salt, refined zinc, copper cathodes, and metal ores—including uranium. Its main imports include vehicles and parts, agricultural and industrial equipment, furniture and household machines and ICT products. Among the new investment opportunities now available in Namibia are a marble and granite processing plant, hardwood charcoal packaging plant, the development of a new conference centre, a tourism facility, a low-cost building system and a truck stop for the Port of Walvis Bay.

President Geingob said Namibia hoped to correct the imbalance in import and export volumes to develop greater manufacturing capacity within Namibia, for export across the Southern African Development Community (SADC) region.Tarah Shaanika, CEO of the Namibia Chamber of Commerce and Industry, said while South Africa and Namibia were already close trading partners, there were opportunities for further investment growth across multiple sectors. “Namibia has a track record for predictable policy changes and an accessible and consultative leadership, which is very good for business,” he said. “Namibia is also working very hard to grow its skills base, with a focus on vocational training in consultation with business.”

He said potential investors commonly considered Namibia’s relatively small population when looking at investment possibilities, but that this should not be a primary concern. “Size doesn’t matter in our case. Namibia has become a transport and logistics hub for the entire region, as we have the infrastructure to move goods with ease.”

Namibia’s ports, rail and road infrastructures connect the country with an expanding market of nearly 250 million consumers across the SADC region.

Gabriel Sinimbo, Permanent Secretary in the Namibian Ministry of Industrialisation, Trade and SME Development, says that Namibia also offered a range of incentives for investors in manufacturing capacity development, including building and transportation allowances, training incentives, cash grants and export promotion allowances.

Namibian Finance Minister, Calle Schlettwein, added: “Only through increased intra-African trade and investment can our potential to bring about prosperity be realised. There is a fresh breeze blowing, but that fresh breeze must be sustained and fuelled by continued peace and stability, by continued and improved transparency, by maintaining macro-economic stability, by improving our competitiveness, maintaining and improving our sophisticated financial services sector, by a better environment in which to do business, and through better governance. All that we do must end in shared prosperity: more jobs, better wealth distribution and deeper economic integration cross-border. Namibia is asking the business community to invest, but is not doing so empty handed. We offer an excellent basket of incentives and fantastic prospects for good returns that can be repatriated freely.”

Jeff Radebe, South Africa’s Minister in the Presidency, confirmed that Namibia and South Africa has 71 agreements and memoranda of understanding in place across a broad spectrum of areas. “We acknowledge Namibia’s continued importance as a major trading partner of South Africa,” he said. Pointing out that intra-African trade stood at only 13%, with immense scope for growth, Gauteng Premier David Makhura urged business to turn national agreements into concrete plans to grow trade and investment across the SADC region. “We would like our cities, municipalities and firms to do more to translate national agreements into action. Gauteng stands ready to make its own contribution and seize the opportunities presented by our continent’s economic growth. We have the skills and resources to contribute to the industrialisation of Namibia and the entire SADC region,” he said.

Addressing the conference last week, Namibia’s Minister of Industrialisation Trade And SME Development, Immanuel Ngatjizeko, said the conference represents Namibia’s firm commitment, to reconnect policy making at the executive level to the global and local expertise and hard work that comes from investors.

“The conference also signals the new approach of this government towards a more inclusive civil dialogue regarding the objectives of the country. By putting ‘inclusive growth’ at the forefront it highlights the importance of strengthening the social dimension of Namibia in all its facets; by alleviating poverty; by building societies that are more cohesive; by modernising social protection and promoting social investment; and by improving employment opportunities.

“With Namibia being on the brink of the 5th National Development Plan (NDP5), which pushes Namibia towards the implementation of NDP4, it is important that key growth and development areas are in relation to:

  • Sustainable energy development;
  • Water infrastructure development; and,
  • expanding the manufacturing base of the country.
  • With regard to the last point, expanding the manufacturing base encompasses three key sectors: fisheries, agro-processing and sector SME development.

Ngatjizeko said although the current global economy remains volatile, they would like to prove with the conference that Namibia is still ideally positioned to benefit from this present economic environment by offering investors more conducive avenues to attain a better return on their investments.

“The general global trend of high levels of growth that were common in the last ten years is slowing down and projections for 2016 throughout to 2020 remain subdued. Furthermore, the expansion in emerging markets and developing economies, while still accounts for over 70% of global growth, declined for the fifth consecutive year, while a modest recovery continued in advanced economies,” says Ngatjizeko.

According to him there are three key transitions, which will continue to influence the global outlook and Namibia:

  • The gradual slowdown and rebalancing of economic activity in China away from investment and manufacturing toward consumption and services have led to a slowdown in imports and exports. This is in part a reflection of the globally weaker investment and manufacturing environment.
  • Lower prices for energy and other commodities, such as the decline in fuel prices and the either constant or fall in commodity prices.
  • Growing uncertainty and volatile economic performance among two neighbouring economic power houses over the recent months has been one of the contributing factors in the fall of the Namibian Dollar in relation to the American Dollar, due to the pegged relationship between Namibia and South Africa. More importantly, the growing threat of a credit rating downgrade may also negatively impact Namibia’s economic outlook.

“This new approach builds on the lessons learnt to develop a flexible and output-oriented structure from the previous National Development Plans. Our ambition for this conference is to foster a greater level of engagement and deeper dialogue with all stakeholders with the aim of making Namibia top of mind when it comes to foreign direct investment in the region,” said Ngatjizeko.

He concluded: “Last but not least, Namibia has always been a country that is friendly to foreign direct investment. For example, Namibia has stipulated and implemented large amount of investment incentives through our Economic Development Incentives Program.

DID YOU KNOW?

  • The economy of Namibia is closely linked to South Africa in terms of trade. In 2012 Namibia imported more than R35 billion worth of goods from South Africa.
  • South Africa’s main exports to Namibia consist of vehicles, machinery, pharmaceuticals, processed food, clothes, cement, petroleum and petroleum products, and iron and steel. A significant percentage of Namibia’s exports go through South Africa, with more than R5 billion worth of goods destined for the South African market in 2012.
  • Namibia’s main exports to South Africa include beverages, livestock, meat products, fish and minerals.
  • South African companies have a large number of investments in the key industries in Namibia such as mining, retail, banking and insurance. In 2012, total South African investments in Namibia were valued at more than R58 billion.
  • Namibia contributes greatly to the growth and development of the South African tourism industry. Although having only a relatively small population, Namibia ranked as South Africa’s 9th largest source of tourism in the world with some 200 000 visitors in 2012. It was also the largest source of business tourists (25 000) for South Africa in the world in 2012.
  • Namibia is also a key economic and social partner within the Southern African Customs Union (SACU), the Southern African Development Community (SADC), and the African Union (AU).

"The new Investment Promotion Act, which has been recently enacted, aims to improve Namibia’s ability to attract and retain meaningful foreign direct investment into Namibia for long-term sustainable development. The discerning investor, looking for attractive fiscal benefits and an appropriate enabling environment, surely cannot afford to miss the opportunity that Namibia offers.”

Tjiurimo Alfredo Hengari and Chris Saunders concludes in their extensive trade and investment report Unequal but intertwined: Namibia’s bilateral relationship with South Africa: “Whatever developments may take place, it is important to note that Namibia and South Africa will remain tied together: not only by being contiguous, but also by their liberation histories—even when the liberation movements now in government do eventually lose power—as well as by their intertwined economies.

"It is in both countries’ interests that their future relations remain as friendly and close as possible.”

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