Import restrictions versus rising prices: where is the balance?
Debate has been raging in the country following the decision by a local company to take the government and Namibia Dairies to court over the imposition of quantitative restrictions on dairy imports into the country.
Matador Enterprises is not the first company to take the government to court over the imposition of quantitative restrictions or Infant Industry Protection and certainly not the last. A similar case in which a Chinese-owned company is challenging the constitutionality of the imposition of an Infant Industry Protection given to the local cement industry, is currently pending before the local courts.
For the record, I must mention that I have sympathy for the local producers and manufacturers who have to compete against established companies from South Africa, Europe and the America’s. The government through its industrial policy would like to see more industries being established in order to realise the goals of Vision 2030, and it makes sense that these newly-established industries should be allowed to grow especially in their infancy stage in order to compete favourably against their established competitors.
It has been argued that protection of our fledgling industries would encourage the establishment of more companies, more jobs and so forth, all benefits to the local economy. But the purpose of this opinion piece is not to lobby for infant industry protection, quantitative restrictions or any such measures meant to protect our industries as that has been done expertly elsewhere.
The purpose of this article is to foster debate on where do we draw the line between granting protection to our young industries and the rising prices that follows after such restrictions have been put in place.
Before the imposition of the restrictive measures on chicken imports, the price of chicken was around N$25.00 per 1.5kg of chicken and this price had remained relatively stable for a number of years. But since the government evoked the Import and Export Act in a bid to protect the local poultry industry that had been struggling financially, the price of chicken has since doubled.
This is a cause for concern because while I would like to see industries or companies grow or compete on a level playing field, this should not be allowed at the expense of the consumer who has to bear the brunt of the increased prices.
Team Namibia has been on a campaign to encourage the consumption of locally-made products, but I feel the emotions surrounding the support of local industries will count for nothing if the customer has to pay more for the local product compared to imports.
When the restrictions were put in place we were made to believe that a team would be put in place to monitor any price increase so that the local companies do not take advantage of their domination of the market. Where is that team when prices are increasing at a rapid pace?
You can’t expect people already suffering from low salaries and high levels of poverty to blindly support local industries. There has to be justification in doing that, and at the moment I don’t see the need to prefer the local products over the imports except for sentimental reasons.
Chicken used to be my number one source of protein, but sadly I have now been forced to look for alternative sources of protein because chicken has just become too expensive for me.
So while I would like to see local industries being given all the support and protection they deserve in order to compete favourably, this should not be done at the expense of my pocket. In the end, who will benefit if companies charge exorbitant prices for their products that we as the consumers can not afford?