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Industrialisation goes further with development finance

Industrialisation goes further with development finance

By Jerome Mutumba

DBN Head of Marketing and Corporate Communication.

Namibia’s industrialisation agenda involves reorganization of Namibia’s economy with the specific goals of manufacturing and value addition to Namibia’s natural resources, as well as establishment of the country as a regional transport and logistics hub to promote trade.

Due to the pressing need for economic development, industrialisation cannot be left to occur on an evolutionary basis. It must be stimulated with national economic programmes and policies, as well as a sound financing ecosystem.

There are five aspects that are at the core of Namibian industrialisation, where the Bank can assist with finance.

The first is manufacturing. The current opportunities lie in basic consumer goods such as foodstuffs and textile derived products, construction materials and value adding to Namibia’s mineral resources. In terms of basic consumer goods, economies of scale can be achieved with strategies that are geared to trade. Regional structure and policies provide for trade, and local entrepreneurs with vision should research enabling opportunities.

The second is mining. The Bank does not participate in the exploratory phase, focusing on active mining. It may, however, finance infrastructure. It may also finance downstream enterprises that support mining.

The third aspect is transport and logistics. This is a vital activity to distribute products and, in a lesser degree, to support services. The Bank finances public infrastructure such as roads and bridges, but also provides finance for the private sector. Fleet for start-ups should be backed by contract. The Bank is actively seeking opportunities to finance warehouses, bonded warehouses, cold storage and truck ports. These may be used for trade within Namibia’s regions, or within the SADC region.

Energy and electricity are the fourth aspect. The Bank has provided and can provide finance for generation and distribution. Generation can be traditional sources such as coal, oil and gas, and the Bank also has a strong track record in the area of renewables, such as solar and wind. Although renewables need to be assessed for impact on the national grid, the Bank can foresee that larger enterprises will benefit from their own solar installations.

The fifth aspect is water. The Bank is entering the field on a national scale with finance for the Neckartal Dam in southern Namibia, however the Bank can also provide finance for the private sector to adopt water efficient technologies used in industrial processes. The Bank can also provide finance for enterprises that need water storage and reclamation.

Industrialisation will be most evident in Khomas and Erongo regions, where economic activity is vigorous. The vigour of the economic activity creates an ecosystem in which suppliers and off-takers are relatively abundant, fueling further economic activity.

However, in regions where there is a lower degree of economic activity, an enterprise environment and infrastructure has to be developed to enable greater industrialisation. In this regard, SMEs are precursor enterprises, and DBN finance can assist in establishment of the businesses. Central northern Namibia on the cusp of readiness for industrialisation, and far north-eastern Namibia has potential on the basis of trade.

Demand for construction material as well as food and related agri-processing offer gaps in the markets in regions that are less economically active.

The current focus on industrialisation holds promise for the future and the Bank is ready to assist. Enterprises with the ambition to play in the fields mentioned above should approach the Bank and expect more.

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