‘Get serious about manufacturing’

Jo-Maré Duddy – Namibia’s private sector represents a huge reservoir of creativity and innovation, which needs to be unleashed and promoted instead of being hindered by a hostile regulatory environment.

Implement the above and the “results will follow”, says the chief executive officer of the Namibian Manufacturers Association (NMA), Ronnie Varkevisser.

Varkevisser spoke to Market Watch about the role the sector can play in making Namibia a working nation.

Manufacturing has massive potential as a job creator, Varkevisser believes. For every job created in the sector, three to four jobs are created elsewhere, he stresses.

“The manufacturing industry can be a huge contributor to jobs with the harbour and easy access to international markets. It is simple: the more output any company/factory or plant has, the more employment will be created, while new opportunities will attract further investment which directly correlates to job creation,” Varkevisser says.

Enabling environment

To unlock all this potential, however, the private sector needs an enabling business environment, he emphasises.

“To grow the economy, and the manufacturing sector with it, is a slow and painful process. It all starts with an enabling environment for private businesses in general,” Varkevisser says.

“Private business persons are the prima facie development agents for our national economy. Let them engage in their businesses unhindered and without interference, and they will grow their businesses, apply changes in their respective industries (innovation), create jobs and provide more prosperity as a spin-off to society,” he adds.

Varkevisser continues: “The factors for an enabling environment are well known and have been highlighted before at numerous occasions. However, if the political will is not there to create an enabling environment, then we needn’t even bother to start.”

The NMA is not “propagating a wild, ruthless and completely uncontrolled private sector”, he points out.

“We simply mean control and regulations should be kept to minimum levels. These days we see all too often how regulatory bodies and authorities try to interfere and dominate private business.”

Playing field

The private sector can only grow employment opportunities if output grows, Varkevisser says.

“It is a simple principle - you cannot slice the same cake in more slices and call it growth, you need to increase the size of the cake.”

However, the cake will only grow if the public and government work together to support industry.

“If not, we will continue to deceive each other and play politics,” Varkevisser maintains.

Namibia’s policymakers and all line ministries need to make the right decisions and not only pay lip service to key enablers like the Growth at Home initiative and the new Procurement Act.

Varkevisser cites quota allocations which are subject to a scorecard system where local procurement is promoted as one of the key pillars. Yet South African traders are allowed to flood the local market, “because they have spare capacity and it is cheaper to dump product than to stop an operation”.

The NMA is urging government to create a fair and even playing field.

“It is not easy competing against South African companies looking abroad to ‘dump’ their excess capacity into a small economy. It is also challenging to compete against these companies that do have economies of scale and manufacturing incentives leaving Namibians manufactures behind from the starting blocks,” Varkevisser says.

According to him, the industry already finds itself in a “cost squeeze” with the shrinking economy and increasing expenses like utilities and salaries.

Incentives

Policymakers should support local industries and enforce stricter import duties for foreign manufacturers who dump their products in Namibia, Varkevisser says. If not, the local sector suffers and this directly affects Namibian jobs and the creation of more employment opportunities, he adds.

“Protect local manufacturers from cheap and substandard products flooding the market. Follow through on legislation, stop lip servicing,” Varkevisser says.

Incentives, like a tax rebate, should be considered as an inventive for companies to buy local.

Legislation like the new draft Namibian Equitable Economic Empowerment Bill (NEEEB) and the Namibia Investment Promotion Act (NIPA) should support and not be an impediment to the sector.

Namibia has a skill shortage, but an oversupply in unskilled or semi-skilled employees, Varkevisser says. Manufacturing can help filling that gap, he advocates.

However, work permits for the required skilled people should be easier obtainable.

“We can learn from specialists. Where we don’t have specialists, then we should allow work permits and make residency as attractive as possible for these individuals.

“If you have one expert employed who in return could mentor several Namibians, this in turn would help to grow our skills set,” he says.

Spend more productively

Government’s exorbitant wage bill on its “under-performing and bloated civil service”, coupled with loss-making state-owned enterprises (SOEs) are “money depleting mechanisms”, Varkevisser says.

These are “serious stumbling blocks on the way to economic recovery and growth”.

“Too much money is wasted without value being added. Spending money without added value in return is a pure waste and a loss to the national economy,” Varkevisser says.

He elaborates: “If you consider the share of the public sector (including SOEs, municipalities etc.) in the national economy, this places additional responsibilities on the shoulders of government, because anything it does (or omits to do) will have a wide-spread impact all over the economy.”

“Maybe government misunderstands this situation as being one of power and influence. However, it should be seen as one of sensitivity and responsibility instead, requiring a careful and prudent approach,” Varkevisser concludes.