Promotion of Competitiveness of the Namibian Economy

Context

While Namibia's per capita income of USD 5,840 (2013) makes it an upper-middle income country in the World Bank’s classification, it still faces problems of high unemployment and poverty, and great social inequality, which it inherited at independence in 1990, and cannot be solved by the current moderate economic growth. To overcome these challenges, the country needs urgently to create more jobs in order to provide people with better incomes.

Namibia’s overarching policy document, Vision 2030, foresees 'a prosperous and industrialised Namibia [that enjoys] peace, harmony and political stability.' It emphasises welfare and human development, equitable growth, a stronger industrial sector and modernised agriculture. For a more conducive economic and political environment based on Vision 2030, the government has formulated policies for economic development including an Industrial Policy, the Namibia Financial Sector Strategy and the current National Development Plan 2012 to 2017 (NDP4). The main goals of the plan are to achieve sustained high economic growth rate, job creation and increased income equality.

The strategy for executing the Industrial Policy, known as ‘Growth at Home’, was developed by the Ministry of Industrialisation, Trade and SME Development (MITSD) and adopted by the national Cabinet in 2014. The three intervention areas of ‘Growth at Home’ are: supporting value addition in production, securing market access and improving the investment climate.

Objective

New Namibian firms have been established and existing ones are growing. Local value addition, employment and income opportunities are increased.

Approach

This Namibian–German project supports the Government of Namibia in implementing the policies described above. It focuses on growth strategies for selected economic sectors, as well as financial systems development and capacity development in the institutions involved. It is complemented by the related GIZ project for the promotion of vocational education and training.

Led by the Ministry of Industrialisation, Trade and SME Development (MITSD), the project analyses selected value chains within the economy that demonstrate high growth potential. Based on the results, and guided by the expected market interest in products, measures are then implemented which tap into that potential. The main target of this support are small and medium-sized enterprises (SMEs) in all regions of Namibia. To ensure the beneficial impact of the measures, the process involves public and private sector stakeholders, including the Namibia Chamber of Commerce and Industry (NCCI), the Namibia Manufacturers Association, Team Namibia and the Namibian Employers Federation, as well as the Business and Intellectual Property Authority, the Namibia Statistic Agency and the Local Economic Development Agency.

Project activities include business management training, assistance with product development and the introduction of new technologies. The Namibia Investment Center (NIC) receives support in devising strategies to increase foreign direct investments that encourage new enterprises and business growth. At the same time, the project is encouraging a more conducive business environment, for instance through the simplification of processes, incentive schemes and access to local and regional markets. These measures benefit all businesses and sectors in the country. Public-private dialogue is similarly important, so the project supports NCCI in its communications and advocacy efforts on behalf of the private sector.

Access to finance is a key constraint for businesses, especially SMEs. To improve that access for Namibian enterprises, a number of reforms and specific measures are foreseen in the Namibia Financial Sector Strategy (NFSS). To support these efforts, the project is cooperating with the Bank of Namibia, the Namibian Financial Institutions Supervisory Authority, the Development Bank of Namibia and others in adapting regulations (e.g. the Credit Agreements Act and the Banking Institutions Act) and in assessing the viability of new financing instruments, such as venture capital, credit guarantee schemes and a fund with a first-loss component. Meanwhile, with support from the project, the Financial Literacy Initiative hosted by the Ministry of Finance is communicating important knowledge to enhance access to finance. The initiative includes professional-level training in business and financial management, as well as more general awareness raising with respect to financial services.