Struggling logistics sector anticipating strong post-COVID 19 recovery
By Britt du Plessis – Nedbank Head of Business Banking.
Prospects have started to improve for the logistics sector in Namibia as the rest of the world gradually recovers from the COVID-19 pandemic. This sector is important for the growth of the Namibian economy, as Namibia is well-placed to be a logistics hub for its landlocked neighbours.
The Walvis Bay Corridor Group, which promotes the country’s transport corridors, has stated that before COVID-19, the industry was following Namibia’s economic trajectory as measured by its GDP. They say that, like so many other countries’ industries, they have suffered from reduced demand.
The Namibian government has declared 2022 as the Year of Reimaging. However, we know that the current environment presents challenges for businesses across the country, including staffing shortages and the resulting impact on trading, as well as supply chain disruptions.
We have seen the impact on businesses vary, depending on the industry, the geographic location, and the life stage of a business. Generally, we’re seeing the hospitality, transport, tourism and leisure sectors most affected. Nedbank Namibia stands ready to work with both the government and the business sector in reimaging Namibia. We do believe that with our advanced logistics sector, we can overcome and rebuild on the setbacks brought about by the pandemic in the last two years.
She emphasized that Nedbank Bank was ready to talk to customers who were struggling. We continue to see that businesses can remain resilient in the face of the pandemic. Nedbank has a range of support measures on offer, and we encourage businesses to speak to us about how we can help and tailor solutions to meet their changing needs.
Namibia’s infrastructure is highly rated, with the World Economic Forum’s (WEF) Global Competitiveness Report Index rating Namibia’s road network as one of the best in Africa. The ports of Lüderitz and Walvis Bay are well regarded internationally, with increasing import and export volumes for both local and international markets. The new container terminal at Walvis Bay has doubled the port authority’s container handling capacity from 350,000 to more than 750,000 containers. The current upgrade of Hosea International Airport is expected to increase passenger volumes to 2 million per year by 2030.
Furthermore, transport corridors such as the Trans-Kalahari Corridor, Trans-Cunene Corridor, and Walvis Bay-Ndola-Lubumbashi Development Corridor are important gateways to the Southern African Development Community (SADC) market. Namibia’s rail system is linked to South Africa and extends from the south to the Angolan border.
Our infrastructure presents Namibia as an attractive investment destination. Although our market is small, we position ourselves as a gateway to southern Africa, with a population of over 230 million people. There have also been major investments in upgrading our seaports, roads, and airports.
It cannot be denied that the pandemic has taken a toll on Namibia’s logistics industry. According to the Bank of Namibia, the transport and storage sector contracted notably in 2020 due to low volumes experienced in most cargo categories because of COVID-19 restriction measures. The real value-added in the transportation and storage sector is expected to fall by 22.4% in 2020, after falling by 0.6% in 2019.
The real value-added of the transportation subsector is estimated to have decreased by no less than 26.9% during the review period, compared to a more moderate decrease of 5.1% the previous year. Road and rail cargo volumes receded notably in 2020 but were nevertheless supported by the need to maintain supply chains, whereas passenger transport volumes collapsed.
The Namibia Statistics Agency has attributed the transport and storage sector’s downward path to poor performance, primarily in the subsector of air transport and airport services activities. This is due to restrictions on travel, both local and international, following the outbreak of the COVID-19 pandemic and the associated measures put in place to curb the spread of the disease, resulting in weak demand for airline services.
Furthermore, the freight transport by road subsector is not doing well because there is less demand for goods, which means fewer goods need to be moved.