Guest Contributor | Jul 3, 2019 | 0
Government needs a responsive Export Promotion Strategy to support the Harambee Prosperity Plan
An Export Promotion Strategy that is responsive to current trends in global trade and latest developmental needs will increase the chances of the Harambee Prospect Plan (HPP) to create a prosperous Namibia within the define time frame. A defining feature of developing countries including Namibia is the relatively small size of their domestic markets. When demand on the home market is limited, a strong export performance is vital for economic growth and prosperity.
In this regard a responsive Export Promotion Strategy that is embedded into the HPP will ensure an export-led growth – a key ingredient in the achievement of the national prosperity. Integrating such a strategy within the HPP will not only help to speed up the Namibia’s industrialization process, but it will also increase exportation of goods for which Namibia has a comparative advantage.
Exports play an important role in the Namibian economy or any economy for that matter – influencing the level of economic growth, employment and the balance of payments. Government’s past efforts in promoting exports have paid off in the form of lower transport costs, globalization, economies of scale and reduced tariff barriers and have helped exports become a bigger share of national income since independence. Latest statistics from the Namibia Statistical Agency (NSA) shows that exports increased to N$14.6 billion in the 4th quarter of 2015 from N$12.8 billion in the 3rd quarter of 2015. Furthermore, exports have averaged N$6.0 billion from 1999 until 2015.
Given the significant role of export in the economy, governments across the world are encouraged to continue pursuing sustainable exports promotion strategies that responds to current developmental plans and requirements. Now more than before Namibia urgently needs to craft a strategy that will respond to current developmental needs as reflected and presented by the HPP.
An Export Promotion Strategy being advocated for in this article is simply that public policy measure which could actually or potentially enhance exporting activity at the company, industry, or national level. Although Namibia boasts a number of such initiatives in the past – world trade has significantly transformed and new strategies – that also speaks to the HPP are thus needed. Nowadays there are many forces that are at play to determine global trade (the international flow of goods and services) and export promotion is one of the principal opportunities that government has at its disposal to influence the volume and types of goods and services exported from Namibia.
THE ROLE OF EXPORTS
Chapter Four (4) of the HPP emphasizes the importance of the economy in the fight against poverty and corruption. It states that the most effective way to address poverty is through wealth creation, which in turn is done by growing the economy in a sustainable, inclusive manner and through the creation of decent employment opportunities. In this regard a minimum 5,000 new jobs in the manufacturing sector should be created (HPP04.1) during the Harambee period. Export promotion thus becomes critical in achieving this goal.
Experience has shown that growth in exports can create decent employment. For example, the growth in the exportation of manufactured products i.e. metals, fish, meat etc. has created many jobs in the manufacturing industries across Namibia. Traditionally, export jobs in manufacturing industries have been an important source of full-time employment in Namibia. Although in recent years exports have become more diversified with a greater emphasis on service sector based exports and Government can still ensure massive job creation by promoting exports in line with the HPP aspirations.
Chapter Six (6) of the HPP states that: “Modern, reliable infrastructure is critical for high and sustained economic growth. Without it, almost everything in the economic value chain tends to be slower, less reliable and more expensive than is necessary.” Exports being a critical component of aggregate demand (AD) and if government is successful in rising exports it can help increase AD and cause higher economic growth that is much needed to propel Namibia to prosperity.
Growth in exports will also have a knock on effect to relate ‘service industries’. For example, the success of manufactured exports will help the local economy with local service providers i.e. transport, telecommunications etc. and many businesses including Small and Medium Enterprises (SMEs) can benefit from increased AD.
Poverty in its various forms has increasingly occupied the attention of our government and hence it’s not a surprise that it at the centre of the HPP goals. Export promotion can therefore talk directly to the desired outcome [HPP07] with respect to hunger poverty during the Harambee period i.e. there will be zero deaths in Namibia that can be attributed to a lack of food.
One of the most direct ways in which export promotion can impact on poverty is via the impact it has on wages, employment and profits from production (e.g. farmers). Increased export – oriented activities such as in Agriculture sector will result into increased demand for unskilled labor which will in turn result in increased employment opportunities and/ or wage increases for this group of workers. Given that in Namibia, the majority of the poor are unskilled, the scope for direct poverty reduction via export promotion thus become substantial and well within the HPP aspiration.
Current account deficit
In the past few decades, Namibia has had a persistent current account deficit, which could be attributed to the Namibia relative poor export performance. In 2015 Namibia’s trade deficit widens throughout reaching N$39.2 billion at the end of 2015. According to the NSA goods imported into Namibia increased only by N$5.5 billion to N$97.6 billion in 2015 from N$92.1 billion recorded in 2014. The NSA further states that the country’s overall exports declined by N$6.3 billion, or 9.8% to N$58.4 billion compared to N$64.7 billion in 2014 thereby widening the current account deficit. This situation does not augur well with the aspirations of the HPP. To improve the current account deficit and support the HPP government needs to promote exports.
Building the legacy (Made in Namibia)
The HPP contains very powerful statements/messages that if communicated well far and beyond will ensure that HPP becomes Namibia’s calling card and becomes Namibia’s greatest legacy. Powerful statements such as “No one should feel left out, The Namibian House, Harambee, etc” needs to be sold to the world through export promotion platforms. Government’s lead in export promotion activities will go a long way in marketing the HPP and build the image of the country and its industries.
No one can deny the importance of the world’s famous “made in” – Imagine Made-in-Namibia! The country-of-origin of a product remains an important label determining the competitive advantages of a nation’s economy and building the image’s perception of national companies. Take for example – “Swiss watches are precise. German machineries are sturdy. Italian design is elegant. Chinese manufactures are cheap and Namibia’s kapana is juicy.”
All these stereotypes depend on the image of a country which people have assimilated. Some may be positive and other harmful to your business. If Government can introduce responsive export strategies to work on the positive attitude of Namibian products, it will help sustain and optimize on Namibia’s competitive advantages. Through these strategies Government can promote successful industries, open offices abroad, communicate and praise the quality, elegance, and low costs of Namibia’s economic activities. In the end the HPP could become Namibia’s number one (1) calling card and the greatest national legacy.