Partnership for economic growth

Programme description

Title: Partnership for economic growth
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Namibia
Lead executing agency: Namibia Planning Commission (NPC)
Overall term: 2005 to 2015

Namibia Ralf Bäcker, version-foto

Context
With per capita income of around USD 7,000 per year, Namibia is considered a middle-income country, but is marked by a substantial disparity in income. At 29.6 per cent (2013), the rate of unemployment is relatively high, with unemployment among young people and women presenting a particular challenge.

The economy is not diversified and is heavily dependent on exports of natural resources with volatile prices. Tourism and fishing are also key sectors of the economy. The manufacturing industry is small, and the potential for job creation is not being harnessed. Cumbersome administrative frameworks, difficulties accessing financial services and a lack of qualified staff are preventing new companies – especially small and medium-sized enterprises (SMEs) – from being established and existing companies from growing sufficiently.

Objective
The general conditions for private-sector growth and employment have improved. As a result of better access to financial services, implementation of local business support strategies and an enabling environment for businesses, small and medium-sized enterprises are more active and employment is higher.

Approach
GIZ is working with business associations and chambers of industry and commerce to identify barriers to economic development and to incorporate measures to eliminate these hindrances within appropriate government strategies, while also helping project partners to implement these measures.

The advisory services are aimed at enabling institutions in the private sector to represent their members’ interests in a structured and targeted way. The project supports business associations and chambers of industry and commerce in developing instruments and services – for instance, for annual assessments of the business and investment climate.

At the same time, the relevant departments of the Ministry of Trade and Industry and the Ministry of Finance are being supported in developing and implementing strategies to encourage economic development. These include the National Development Plan, Industrial Policy and Financial Sector Strategy. The project is helping implement these strategies by assisting financial and business services in creating appropriate products for SMEs in particular.

Results
Important foundations have been laid to improve conditions for developing the private sector.

The data gathered in a census of business enterprises and the annual business climate study are now available. The newly founded Namibia Statistics Agency regularly collects and publishes current, important economic data.

Dialogue between the Namibian Government and the private sector is more structured and draws on the data that are now available. This has had a considerable influence on shaping the objectives and content of the fourth National Development Plan, the Industrial Policy, the Local Economic Development Strategy and the Financial Sector Strategy.

Strategies for promoting local business and industry have been developed in 13 cities and regions, and are currently being implemented thanks, in part, to the creation of a local business support agency. The project has promoted and supported the establishment of system-relevant institutions such as chambers of industry and commerce and business associations, which now represent around 8,500 enterprises. Business services such as the Namibia Business Innovation Institute and SMEs Compete have, in recent years, become leading institutions for innovation and entrepreneurship in Namibia and offer, among other things, the infrastructure for developing products.

The project successfully initiated a savings and microfinance cooperative in the northern part of the country that markets loans and financial products to micro and small enterprises. The pilot project was so successful that the cooperative has been transformed into an official microfinance bank, which now has around 14,000 customers, 90 per cent of whom are women.

The establishment of the Financial Literacy Initiative (FLI) has created a structure for launching measures to improve financial literacy and consumer protection. In 2014, the FLI helped over 130,000 people. The Bank of Namibia has devised regulations that will lead to reduced banking fees – for example, by introducing a free bank account for the entry-level segment – and significantly lower transaction costs for consumers.

The Parliament adopted the Growth at Home industry strategy at the end of 2014. This lays the foundations for a new project known as Promoting Competitiveness (ProCom).

Namibia Ralf Bäcker, version-foto

Contact

Daniel Bagwitz
daniel.bagwitz@giz.de