Ministry of Trade and Industry

Introduction

The Ministry of Trade and Industry is one of the key economic ministries. It is responsible for the development and management of Namibia’s economic regulatory regime on the basis of which the country’s domestic and external economic relations are conducted. It is also responsible for the promotion of growth and development of the economy through the formulation and implementation of appropriate policies for attracting investment flow into the economy, and promoting industrial development and trade.

To achieve these objectives, the ministry pursues programmes and activities aimed at transforming the Namibian economy from its present heavy reliance on the production and export of raw materials to one in which manufacturing becomes a key component.  Therefore, enhancing the contribution of manufactures to the Namibian economy, and helping Namibian industries become more efficient and competitive is a central objective of the ministry.

Over the last nine years, the ministry’s efforts have been directed at four key activities: (1) investment promotion; (2) facilitating manufacturing activity; (3) promotion of the growth and development of small and medium-sized enterprises (SMEs); and (4) growth and diversification of Namibia’s exports. To this end, the ministry has been involved in the enactment of relevant legislative instruments, strategy design, and mobilisation of resources.

Structure of the Ministry

 The ministry has six main divisions, namely, the Office of the Minister, the Department of Investment Promotion, generally known as the Namibia Investment Centre (NIC), and the Directorates of Administration, International Trade, Industrial Development, and Internal Trade. Furthermore, the ministry oversees the work of three government development agencies, namely, the Namibia Development Corporation (NDC), the Offshore Development Company (ODC), and the Development Brigade Corporation (DBC).

Namibia Investment Centre 

The Namibia Investment Centre, created under the Foreign Investment Act, 1990, is the country’s official investment promotion agency. It directs and co-ordinates the work of trade and investment promotion counsellors who are strategically based at Namibian embassies and high commissions in Bonn, Kuala Lumpur, London, Pretoria, and Washington. Its task is to promote foreign and domestic investment by offering a variety of services to the investor community. These services include provision of information on incentives, investment opportunities, and the operations of the country’s regulatory regime. The centre also assists investors in minimising bureaucratic obstacles. In this connection, the centre has a permanent seat on the Immigration Selection Board at the Ministry of Home Affairs.

Directorate of International Trade

The Directorate of International Trade is responsible for the promotion and regulation of external trade. It administers multilateral and bilateral agreements governing Namibia’s international trade. The staff of the directorate are the principal advisers to both the government and the private sector on the numerous rules and regulations governing international trade. They also facilitate the participation of Namibian companies in regional and international trade exhibitions. The directorate is also responsible for information on and Namibia’s participation in various regional and global trade bodies, such as, the Southern African Customs Union (SACU); the Southern African Development Community (SADC); the European Union (EU); African, Pacific and Caribbean Nations through the Lomé Convention; and the World Trade Organisation (WTO).

Directorate of Industrial Development

The Directorate of Industrial Development is responsible for evaluating and appraising industrial projects. In this connection, it sponsors feasibility studies, research and surveys of potential development areas, and renders support and advice to potential developers and investors. It is also engaged in the production of industrial statistics, including the conducting of regular censuses of the manufacturing sector, and is responsible for information technology management and co-ordination within the ministry, including the collation of information on appropriate industrial technologies. In addition, the directorate is charged with the task of overseeing and co-ordinating the development of small and medium-size enterprises. This includes inputs into the six areas that comprise the government’s small and medium-sized enterprise development programme, namely, facilitation of access to finance, construction of sites and premises, technology transfer, purchasing of raw materials, marketing, and entrepreneurial training.

Directorate of Internal Trade

The Directorate of Internal Trade is responsible for the promotion, regulation, and facilitation of domestic trade. It is charged with the protection of all participants in the marketing of goods and services by ensuring quality and correctness in trade dealings. It administers the registration of companies, close corporations, patents, designs, and trademarks.

Achievements

Policy and Legal Framework

A number of policy and legislative measures have been initiated since independence in pursuit of the broad goal of economic growth and development. They include the Foreign Investment Protection Act (Act No. 27 of 1990) which guarantees foreign investors against expropriation and ensures them of their right to repatriation of profits and dividends. The 1992 White Paper on Industrial Development constituted the basis for the introduction of a special package of incentives for manufacturing activity in 1993. The Export Processing Zone Act (Act No. 9 of 1995) established Namibia’s EPZ regime to serve as a tax haven for export-oriented manufacturing enterprises in exchange for technology transfer, capital inflow, skills development and job creation. The Policy and Programme for the Development of Small and Medium-Sized Enterprises, approved by Cabinet in 1997, provides the policy framework for the development of this sector as key to the creation of employment and wealth.

To further improve the country’s regulatory regime, the ministry commenced work on a number of enabling pieces of legislation during 1998. Among these is the revision of the Companies Act to Namibianise several of its provisions, and to streamline the country’s company registration and statutory procedures. A draft Companies Bill would be ready for submission to Cabinet and parliament by the beginning of the year 2000. During 1998, the ministry also initiated a review of the 1992 White Paper on Industrial Development. This review resulted in the publication of a revised Policy Paper on Industrial Development. Furthermore, a draft Bill on Industrial Property would be ready for submission to the parliament in early 2000. This particular legislation is designed to enhance Namibia’s protection of intellectual property rights. A draft Competition Bill was also prepared during 1998 and is being finalised by the legal drafters. The bill is needed to curtail unfair trade practices, inhibit the dumping of products on the Namibian market, and curtail monopolies.

A major on-going initiative is the development of a national quality infrastructure. This is a prerequisite for Namibia in terms of its membership of both WTO and SADC. In other words, a national quality infrastructure is essential for ensuring international acceptance of Namibian products. The ministry is also working towards the establishment of national standards and national accreditation bodies by the year 2001. Guiding these developments is a national quality policy whose strategic implementation plan has already been approved by Cabinet and is currently being refined for submission to the parliament.

In short, the government has maintained the priority status of manufacturing in terms of policy formulation and legislation. It has also given support and encouragement to the private sector for it to focus more strongly on the manufacturing of non-traditional meat, fish, and beverage export products. The basic premise underlining all these policy and legislative measures is the imperative need to stimulate industrial development so that the country may benefit from growth and diversity in value-adding activity.

Industrial Development

Namibia’s approach to industrial development is based on the concept that there will be two types of manufacturing units. Some of these will be built around the utilisation of local materials, such as, minerals, hides and skins, gemstones, semiprecious stones, dimension stones, agricultural produce, fish, etc. The other type will be based on imported components, such as, electronics, garments, car parts, furniture, etc.

In 1997, manufacturing, not including fishing, mining and agricultural activities, contributed 12.3% to GDP, an increase of 2.1% since 1990. Growth has been steady but not as rapid as desired compared to other newly industrialising economies. Industrial investment, however, continues to be much higher than prior to independence. The ministry has, thus, had to play an active role in the creation of an enabling environment for the manufacturing sector to develop and diversify.

In order to facilitate the growth of manufacturing activities in the country, a plan was formulated in 1995 for the development of industrial parks and SME modules at a number of selected sites in the country. This plan was launched with a view to purchasing land and building and providing industrial facilities for either sale or lease to both foreign investors and local entrepreneurs. This approach is aimed at achieving a wide geographical spread of industrial activities.

To this end, the ministry came up with a programme for the construction of industrial parks and SME modules in 1997 to provide affordable premises for small and medium enterprises in both manufacturing and trading fields. The first of these were to be constructed in ten selected towns countrywide. Five of these have already been completed, namely, the Otjiwarongo multi-market, SME module facilities in Gobabis and Keetmanshoop, the Prosperita Industrial Park in Windhoek, and the Ondwangwa Industrial Park.

This initiative has been further complemented by the construction of an EPZ park at Oshikango which was opened in October 1998. The initial ten EPZ enterprises in the Oshikango park have invested a total of N$33 million and created some 233 jobs. The renewed outbreak of an all-out war in Angola has, however, impacted negatively on the Oshikango-based trading operations but manufacturing enterprises there continue to operate normally.

Feasibility studies have been completed and phased construction commenced on SME modules in Rundu, Ohangwena, Karibib, Uutapi, and Katima Mulilo.

 Value addition to Namibia’s hides and skins holds forth great promise for the leather industry in the country. Leather products will also contribute positively to the diversification of the country’s export of manufactured goods. Financial and technical assistance to the leather industry development programme has been rendered by the United Nations Industrial Development Organisation (UNIDO). In 1997, the ministry also established a Revolving Credit Fund aimed at assisting small producers of leather goods. In addition, an extensive assessment of the status of SMEs operating in the leather and footwear sector was carried out during 1997/98 to identify appropriate technologies. As a result of these initiatives, new entrants to the sector have been assisted to improve the quality of their products. In this connection, a Common Facility Centre was established in 1997 at Windhoek’s Northern Industrial Area to offer training and product advice, as well as the use of footwear-producing machinery that it houses.

The ministry’s specific support to the leather industry comprised the following seven initiatives conducted with the assistance of UNIDO:

1.      establishment of a common facility for production and training in Windhoek’s Northern Industrial Area equipped with machines to produce veldskoen and moccasin-type leather shoes,

2.      establishment of a slaughter facility in Ondangwa at which hides and skins can also be amassed,

3.      acquisition of tanning machinery for the Swakopmund and Windhoek commercial tanneries to enhance production processes,

4.      supply of tools and small machinery to shoemakers operating from small workshops in the Gobabis and Keetmanshoop areas,

5.      establishment of a Hides and Skins Pilot Scheme for ex-combatants which involved the creation of hides and skins collection points in Uutapi and Eenhana where participants can deliver untreated hides and skins for sale,

6.      design of a tannery plant and conduct of an environment impact assessment, and

7.      construction of a tannery plant and an effluent and sludge treatment facility in Ondangwa.

Subsequent to the enactment of the EPZ Act (Act No. 9 of 1995), the first export processing zone was established in Walvis Bay in 1995. In 1998, an EPZ industrial park was established by ODC in Oshikango at the Namibia-Angola border for use by companies targeting markets in that country and beyond. On completion, some ten EPZ enterprises commenced operations, ranging from manufacturing to break-bulk and repackaging activities. Once fully operational, the ten EPZ enterprises in Oshikango will have invested N$74 million and created 256 jobs in this formerly neglected area which is slowly turning into a town of merchants. Indeed, the dramatic transformation of Oshikango over the past two years can be attributed to the catalytic effect of the EPZ programme implementation in the area.

International interest in the EPZ regime continues. By early 1999, fifty-six companies had been granted EPZ status, with applications coming from such countries as the United Kingdom, the United States, Germany, Israel, South Africa, Italy, etc. EPZ companies that are operational are busy churning out products, such as, charcoal, car engine parts, bathroom-ware, garments, and soft toys for export markets, and computer-aided design and data processing.

Most of the EPZ companies are engaged in manufacturing and/or assembly activities. Interests, particularly at Oshikango, have diversified into the additional operations of break-bulk, re-packaging, and customer services allowed under the EPZ programme. The level of projected investment by companies at full operation has reached N$ 8.1 billion.

Table 1: EPZ Activities, 1996-1998

Source: ODC

The EPZ programme plays a pivotal role in employment creation. Once fully operational, fifty-six companies granted EPZ status will employ 4049 people, with figures set to rise substantially as more companies come aboard. Incentives to encourage companies to offer in-service training and skills development further ensure that these new members of the Namibian workforce acquire technical and managerial expertise.

Table 2: EPZ impact assessment

(All figures are indicative of status, for companies with EPZ status, at full operation)

Source: ODC

Table 3: Growth in investments (N$’000)

(Companies maintaining EPZ status)

Source: ODC

Table 4: Growth in employment

(Companies maintaining EPZ status)

Source: ODC

In the context of the country’s offshore industry, steps are also being taken to set up an offshore financial services sector. The benefit of this to Namibia would be the creation of white-collar jobs, and provision for easier access to funds that would give impetus for accelerated growth of the EPZ programme. In 1997, the ministry tasked the ODC to draft the requisite legislation. Work on three pieces of legislation, i.e., offshore banking, international business companies, and international trusts is in its final stages.

To further assist in the diversification of the economy through the expansion of manufacturing activity, the ministry has initiated a number of industrial feasibility studies. These include examination of the potential for a Namibian ceramic clay industry. This has involved a comprehensive survey of clay deposits in the Mariental area. Initial evidence suggests that surface clay deposits, while not of prime quality, would be suitable for the development of labour-intensive brick-making projects. Deeper deposits, however, have been found to contain porcelain-quality clay suitable for the production of tiles for the export market. The ministry’s Namibia Investment Centre is already working to secure possible investors for the project.

A feasibility study on the marketing of seaweed was conducted in conjunction with the Taurus Atlantic Company in Lüderitz. A number of export markets for this marine product have subsequently been established, especially in the Far East.

Several new industrial initiatives, specifically those involving women, have been put in place. These include a trial marula and manketti nut as well as melon seed oil production project to investigate commercial production, processing and marketing of natural oils for domestic and international markets, and a food processing project.

Efforts to investigate possible areas of industrial activity have been further assisted through a joint initiative involving the ministry’s Namibia Investment Centre and the EU’s Centre for the Development of Industry (CDI). Technical assistance under this joint venture agreement has been rendered to seventy Namibian companies to expand their production. Companies thus assisted include Nakara, the Namibian Ostrich Breeders Association, Sarnow Ceramics, Peraline Paints, Yetu Cosmetics and a number of brick making enterprises. CDI support has further included the identification of joint venture partnerships in Europe to work with Namibian counterparts. These have included partnerships involving Namibian and Portuguese, German and Swedish businesses.

To facilitate transfer of appropriate technology, the ministry established an Equipment Aid Fund (EAF) in partnership with the Spanish International Co-operation Agency, following the signing of a bilateral agreement in November 1997. The fund has been established to specifically assist Namibian manufacturers with the purchase of machinery and equipment from Spanish suppliers. Recently, an agreement has also been signed with the Import and Export Bank of India to set up a similar mechanism for the purchase of appropriate technology from that country, mainly for SMEs.

In 1998, the ministry published a Guidebook for Manufacturers in Namibia which provides basic information on everything from legal and procedural requirements, incentive schemes, sources of finance, employment practices, and export opportunities. The guidebook would be updated regularly.

A key and on-going function of the ministry is the collection, codification and presentation of up-to-date information on the manufacturing sector. An industrial database system has therefore been established to produce timely and reliable data required for industrial planning and policy making. Initially a manufacturing establishment register was created and was used as foundation for conducting a manufacturing census. This census, the first of its kind to be carried out in Namibia, was conducted according to International Industrial Classification and its results, published in 1996, can be used to compare Namibia’s industrial status with that of other countries. The results show that the manufacturing sector’s contribution to GDP rose from barely 5% in 1990 to 11.2% by 1995. It also indicated that by 1995 there were 278 manufacturing establishments employing a total of some 21 000 people or 4.5% of Namibia’s economically active workforce. The number of both general and EPZ manufacturing establishments has noticeably increased since then.

The ministry further carries out periodic surveys and censuses utilising a technical system established to regulate data collection, processing, analysis and presentation. It is, thus, able to provide data to both government industrial planners and potential private sector investors. The ministry is also working to establish a Web presence to publish and regularly update Namibian industrial information.

Small Business Development

In 1996, the ministry formulated the policy and programme for the development of small and medium-sized enterprises, which was adopted by Cabinet at the beginning of 1997. This policy undertaking was initiated in recognition of the potential SMEs offer to reduce poverty through the process of industrialisation and empowerment. The SME development programme calls for the expansion and diversification of this sector with particular emphasis on manufacturing activities.

The ministry’s role in the implementation of the SME policy is the creation of an enabling environment in which the SME sector can flourish and grow. A Joint Consultative Committee comprising the ministry, NDC and representatives from the non-governmental organisations specialising in SME activities is participating in the implementation of the policy in areas, such as, training. Six pro-active programmes form the core of government support to this initiative. These are finance, marketing, purchasing, technology acquisition, training, and sites and premises. There is also a vendor development programme designed to foster the necessary linkages between SME manufacturers and the nation’s major trading companies.

The SME programme further aims to encourage small entrepreneurs to undertake manufacturing activities in areas, such as, food processing, woodwork, metalwork, textile and garment production, leather work, jewellery, building materials, ceramics, agro-based products processing, chemicals, rubber and plastic manufacturing, electrical and electronic products, motor works, etc. A total of some 35 000 jobs are to be created in the SME sector over a period of three years (1999-2001) through the implementation of this development programme.

The Vendor Development or Partnership Programme (VDP) was initially launched in 1996 with the help of the Commonwealth Secretariat to link small entrepreneurs to established big businesses through supply contracts. The success of the programme, which has started a trend among large business houses to procure from local producers, has prompted its continuation by the Namibia Development Corporation. Sixty-four on-going linkages have already been developed through this programme, each with a minimum order value of some N$5000, and some exceeding N$700 000. As a result of this initiative small businesses from a number of regions have established permanent supply relationships with large firms, such as, Agra Co-op, Namibia Breweries, M&Z, and Game. The Namibia Breweries and BP Namibia projects alone have created over 500 new jobs.

Databases housing information on small entrepreneurs, goods and services they supply, and potential large buyers have already been compiled for Windhoek, Gobabis, Walvis Bay, and Rundu. VDP dovetails into the Input Sourcing Programme which involves the establishment of information centres to house databases on sourcing or procurement of raw material that is competitive in terms of quality and prices from sources other than conventional sources (South Africa) to make production more viable.

Over 100 SMEs are also benefiting from the services of the ministry through the VDP and advisory services of the Centre for the Development of Industry (CDI) experts identified and brought in by the ministry.

A Support for Micro and Small Enterprise Development Program has also been launched with assistance from United Nations Development Programme. The program focuses on institutional capacity building, finance and credit, marketing and purchasing, training, appropriate technology transfer, and legal reforms. Specifically, the programme aims to assist in strengthening capacities of selected national institutions providing service to promote micro and small-enterprises. It will also strengthen capacities of SME support institutions servicing the northern regions (Omusati, Oshana, Oshikoto, Ohangwena, and Caprivi).

The ministry is further implementing a four year programme with assistance from the German Agency for Technical Co-operation (GTZ) focusing on advisory services with respect to the ministry’s SME financial programmes and on-going support to implementing agencies, such as, NDC, the Institute for Management and Leadership Training (IMLT) and the Vocational Training Centre (VTC) to improve their implementing capacity.

IMLT is also involved in the on-going training of the SME operators in technical and business skills, as are a number of other local and international specialist non-governmental organisations, such as, the Italian Comitato Internazionale per lo Sviluppo dei Populo (CISP), and Care Austria. Initiatives in this respect are co-ordinated through the Joint Consultative Committee and are actively guided by the ministry.

A credit guarantee scheme has also been set up with the assistance of the EU and the GTZ to enable small enterprises to access loans from commercial banks and other financial institutions. Absence of collateral has traditionally made banks shy away from financing small entrepreneurs. Through the scheme, the government would provide guarantee for 80% of any loan amount in case of proven default. The lending bank and SME borrower would between them bear the remaining 20% risk. For this purpose an initial N$10 million has been made available as the capital corpus to be deposited with the commercial banks. Interest revenue will secure coverage of both risk and administration costs. In this way, the ministry plans to motivate commercial banks to increase lending to SMEs. The scheme was launched in 1999.

Considerable work has also been undertaken to establish SME appropriate technology demonstration centres. The objective of this project is to install and provide access to viable manufacturing machines at designated sites which would further house information on technology sources. Interested entrepreneurs would thus be able to view machinery under operational conditions, test it out, and undergo basic training before deciding to purchase. Such demonstration facilities are to be established at each of the sites selected for industrial parks. The first is being implemented in Ondangwa, with machinery supplied by the Indian Government for plastics manufacturing. The Ondangwa Industrial Park will also house an engine rebuilding workshop and training facility which is being set up with assistance from the Commonwealth Secretariat, and a wood and metal processing factory established as a joint venture between the Development Brigade Corporation and a German private sector company.

The ministry is in the process of establishing complementary common facility centres at many of the designated demonstration sites. In this connection, a centre for the manufacture of wood products has been set up in Rundu, and one specialising in gem cutting and polishing will be operational in Keetmanshoop by March 2000.

Trade Promotion

In terms of both volume and value, Namibia’s external trade remains heavily biased towards import of finished goods from South Africa. Exports, on the other hand, are largely unprocessed primary products, such as, minerals, meat and fish. However, the conclusion of a number of bilateral trade agreements has initiated the process of reducing dependence on South Africa.

The ministry’s programme of industrial development assumes that growth in manufacturing will have to go hand-in-hand with the diversification and expansion of the country’s exports. The ministry is, thus, responsible for foreign trade policy formulation and management, export promotion, and the co-ordination of Namibia’s participation in bilateral and multilateral trade negotiations.

To this end, the ministry with the financial and technical assistance of the EU launched a two-year (1999-2000) Trade and Investment Development Programme (TIDP). As a result, a long-term strategy has been developed for the expansion of Namibia’s exports with diversification of products as its prime focus. Particular attention has been paid to the marketing of non-traditional export products.

Development of trade information specialists is viewed as an important aspect of the trade promotion function. Emphasis was thus placed on the development of a professional trade information service to meet the information needs of the public. A review of Namibia’s import and export management regime was conducted with a view to rationalising existing procedures to conform to the World Trade Organisation requirements. Work under the TIDP strengthens human resource capacity through activities, such as, on-the-job training and programmes at external institutions, such as, the World Trade Organisation, the International Trade Centre, Singapore Trade Development Board, and Zimtrade of Zimbabwe. These programmes are intended to enable staff to acquire professional skills in their respective areas of specialisation.

The ministry holds regular consultative meetings and workshops to advise the private sector on meaningful participation in foreign trade, and to maintain information flow in regard to opportunities accruing to Namibia from its membership of multilateral bodies, such as, the Lomé IV Convention, WTO, SADC, SACU, and the Common Market for Eastern and Southern Africa (COMESA)

The country’s participation in trade fairs and exhibitions coupled with trade missions to countries in the sub-region, Europe, USA, Asia and the Middle East has resulted in the identification and expansion of new export markets. Namibia’s traditional markets have been mainly South Africa and Europe, particularly for unprocessed mineral products, meat and meat products, and fish and fish products. Today, Namibia exports a number of manufactured products to many countries in the world. Current major export destinations include the EU, Japan, Mexico, Germany, United States, Switzerland, Australia, the Netherlands, Canada, Hong Kong, South Korea, Israel, Ghana, Zimbabwe, and the Democratic Republic of the Congo.

The ministry continues to handle aspects of import and export management, such as, issuing of import, export, and rebate permits and duty credit certificates. In this connection, an important activity has been the development of a customer charter to spell out service provision standards. The charter is currently being put into operation.

The ministry is also establishing a WTO Reference Centre to facilitate access to information on the multilateral trading system that should enable more effective participation in global trade. In this respect, an Inter-institutional Working Committee on WTO matters was formally launched in November 1998 with the primary objective of ensuring Namibia’s adherence to the implementation of WTO agreements.

Namibia is playing an important role in the drive for the implementation of the SADC Trade Protocol intended to achieve regional economic integration.

Through all these initiatives, the value of Namibia’s total exports increased from N$3188 million in 1990 to N$7954 million in 1997, an increase of N$4766 million or a massive 249%. This achievement stemmed largely from access to markets, such as, the EU as a result of Namibia’s accession to the Lomé Convention, and the diversification of the country’s export products. Other positive factors have been the preferential tariff treatment accorded to Namibian products under the Generalised System of Preferences (GSP). On the basis of GSP, Namibian products enjoy preferential access to the United States, Japan, Canada, and New Zealand markets.

Table 5: Composition of exports (N$ million)