The Namibia Economist

Manufacturing sector set to grow 4%

The CEO of the Namibia Manufacturers Association, Hennie Fourie says the outlook for the manufacturing sector in 2012 is one of slow growth due to the impact of the economic crisis in the Euro zone area.
Fourie says he expects real growth of between 3 and 4% in the manufacturing sector contributing about 15 and 16% to GDP, up from 14.4% recorded in 2010. The projected growth is a sharp decline to the average real rate growth of 6% per annum during the period 2003 to 2010. Fourie said: “We are going to experience slow growth this year of 3 to 4% real growth. We will experience growth because of certain projects that will come on board this year such as the chicken plant.” The NMA CEO says the sector would have experienced negative growth if it was not for its reliance on the emerging markets in the SADC region and other African countries which have been resilient in the face of an economic slowdown in the developed markets.
“We are not mainly dependent on Europe, otherwise we could experience negative growth. Most of our exports are to SADC countries and most of Africa is more or less experiencing positive growth,” he said.
In addition to the new projects that will come to production this year, Fourie said he was  hopeful that problems associated with the export of cement into the Angolan market will be resolved, and this he said, will greatly improve production at the country’s only cement plant, the N$2.5 billion Ohorongo cement plant, which started production early last year. He also stated that Infant Industry Protection for this industry was justified, and would hopefully soon be granted.
He singled out the lack of skilled personnel, the reluctance by local retailers to stock locally manufactured products, problems with processing manufacturing incentives, high import duties imposed by Angola - Namibia’s most important export destination for Namibian Manufacturers according to a recent Manufacturing Survey executed by the NMA, as some of the major challenges facing the manufacturing sector.
Fourie said his organisation had requested possible assistance from the Government with the listing of locally manufactured products in retail outlets. “It was proposed to Government to consider imposing a minimum content (say 5%) of locally manufactured products to be stocked by every retailer who sells products which are also manufactured in Namibia. This local content requirement will be similar to what was imposed by Government for locally produced agricultural products some time ago and which was very successful in stimulating the growth of the Namibian horticulture industry.” In a recent discussion held with the Ministry of Trade and Industry, the NMA says the Permanent Secretary proposed that the problem of restrictive business practices be investigated and taken up by the NMA with the Competition Commission. He also suggested that another NMA Forum with retailers be arranged where he could be present, and these problems could be discussed before other  measures proposed by the NMA are considered.  As the most important export destination for locally manufactured products, Fourie said the high Import Duties imposed by Angola in 2003 and strictly enforced by Crown Agents were having  a negative effect on exports from the country.
In this regard,  he said the NMA was requested by the Ministry of Trade & Industry to assist them in executing a survey on preferred Angolan import duties for Namibian manufactured goods to be used as a basis for a Namibia/Angola Bilateral Preferential Trade Agreement.
“Although ratified, it has not yet been implemented by Angola. The Ministry of Trade and Industry however intends placing an official in Ondjiva, near the Oshikango border post, to assist Namibian manufacturers wishing to export to Angola. A date for this appointment has however not yet been determined.  “The possibility of reduced import duties for Namibian manufacturers to Angola in the short term still seems remote, as Angola could not yet give an indication at the recent SADC Trade Ministers Meeting when it will table tariff reduction schedules, and no progress with the implementation of the Namibia – Angola Bilateral Preferential Trade Agreement has yet been made.”
But despite the various challenges facing local manufacturers, the NMA says it is happy with progress made in respect of the handling of input VAT claims of the industry by the Receiver. Previously a desk audit was required by the Ministry of Finance for every input VAT claim exceeding N$15 000. The VAT claims normally took approximately  6 months to be settled and according to manufacturers, was having negative cash flow implications on their businesses. But according to Fourie, there have been some improvements especially in the Khomas and Erongo regions. In these two regions, the Receiver now does not require audits for claims of more than N$15 000 on companies with good standing. However those that don’t have, still have to go through the old procedure. “We are going to evaluate the effect with our members but for now we are satisfied that there has been an improvement, but we would want it to be effected in all the other regions.”
Going forward, the NMA is of the opinion that a SACU industrial policy will greatly improve the fortunes of Namibian manufacturers. “An aspect which should receive serious attention in SACU, is the development of SACU products and SACU brands. In such a case South Africa might be the main manufacturer of a product, but the BLNS countries should also be involved as subcontractors to this main manufacturer. In other words, smaller components of the larger article, produced in the RSA, could be outsourced to manufacturers in the BLNS Countries. That way all countries in SACU could benefit from new developments, and regional integration would be promoted. He says an example of such an industry could be the Motor Industry of South Africa where smaller countries could produce certain components for the larger industry in South Africa. Such production sharing,  i.e. producing parts and components in the BLNS countries, will foster deeper regional integration and benefit all SACU countries.

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