What could be the potential of manufacturing in Namibia?

What could be the potential of manufacturing in Namibia? One of the most significant problems facing African economies remains the difficulty of increasing the share of the manufacturing output within the overall national output. The manufacturing sector is generally characterized by a small capacity and a lack of significant investment which prevents large scale production from meeting the international demand for manufactured goods. Africa needs to achieve higher growth rates in the medium and long run. This will require an increase in investment and address issues related to human development, particularly HIV/AIDS.

In Namibia, manufacturing is conducted within the framework of the industrial development policy and is therefore guided by clear principles. The main principles of the industrial policy of the country include equality, the reduction of poverty and increased growth through product and market diversification. The policy furthermore gives preference to the promotion of small and medium-scale businesses in recognition of their capacity to create jobs. This policy framework is guided by broader national documents such as the National Development Plan 2 and Vision 2030 which suggest that the contribution of the manufacturing sector should grow significantly, in order to achieve the objectives of the national development policy.

Since Independence, Namibia has had a limited industrial development and continues to import most of the manufactured products, mainly from South Africa. This is evidenced by the limited range of manufactured products which the country is able to export. In addition, the sector is characterized by structural weaknesses and the operational constraints of high input costs such as those of electricity and transport.

Manufacturing has an unusually low share in the national output, employment and exports of Namibia compared with countries such as Singapore, South Africa and Ireland. In Namibia the manufacturing sector accounted for an average of 10.3 percent of the GDP for the period 1995-2005, 8 percent of total employment in 2001, and 34.8 percent of exports for the period 1995-2005. In the case of South Africa, this sector accounted for an average of 17.4 percent of its GDP for the period 1998-2004, 9.0 percent of employment and 40 percent of its total exports. In Singapore, this sector accounted for 27 percent of its GDP in 2005, 25 percent of its total employment and more than 50 percent of its exports. The case study country with a significant manufacturing sector is Ireland where the manufacturing sector accounted for 46 percent of the GDP, 29 percent of employment and 80 percent of its total exports. In addition to the relatively low share of manufacturing in the GDP, employment and exports, the growth of the manufacturing sector output in Namibia has been relatively low, registering an average growth rate of 2.9 percent for the period 1995 -2005. This rate of growth is not sufficient to achieve the national development goals as set out in Vision 2030 in which the Namibian economy is expected to achieve an annual GDP growth rate of around 7 percent. Against this backdrop, the main objective of this study is, therefore, to identify and assess potential (current and future) products within the sector which could be growth enhancing, with a view to suggest possible policy options of increasing the manufacturing output in order to achieve the goals of Vision 2030. The study will also identify factors which constrain the growth of the manufacturing sector in Namibia and suggest possible policy options in this regard.

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