Namibia is looking at building value chains with its neighbours whereby products can be jointly produced through a production chain before they are eventually exported or consumed within the Southern African Development Community.
Deputy Permanent Secretary in the Ministry of Industrialisation, Trade and SME Development, Michael Humavindu, told the Windhoek Observer in an interview this week that there is a coordinated effort within SADC to build regional value chains.
Humavindu cited copper imports from Zambia, which are smelted at Tsumeb before being exported as an example of how Namibia can work with her neighbours on chain value additions.
“Intra SADC trade is low because we don’t have the products to trade with each other,” Humavindu said.
He said SADC was now moving to an era where it wants to produce products that it’s able to trade with the rest of SADC, and the rest of Africa through the recently signed Free Trade Area.
“We are moving back to the basics, but we need to get productive capacity right before we can do that.”
Giving another example, Humavindu said Namibia and Botswana could work on a beef value chain, which could increase their beef export quota allocation with the European Union.
“If you look at the beef value chain for both Namibia and Botswana, we need to set up beef storage at Walvis Bay, so that we can have enough capacity for export. Some of this value chains are simple, it’s just a matter of SADC identifying them.
“Some countries in SADC import beef from France, but do you need to bring beef from France if Namibia is able to supply you with beef?”
He said another commodity with high potential of value chains across SADC is cobalt.
Australia’s Celsius Resources, which has made Namibia’s first cobalt discovery, is aiming to start production from the remote mine in 2020.
The Democratic Republic of Congo (DRC) and Zambia are the other producers of cobalt in the region.
A value chain production between the three countries could see them use cobalt to make products for the automotive industry.
Another example is the moving of the Diamond Trading Company from London to Botswana, which has resulted in diamonds produced in Namibia and South Africa being sorted in Botswana.
In 2015, the SADC Heads of State approved the SADC Industrialisation Strategy and Roadmap (2015-2063).
The development and transformation of manufacturing within SADC forms one of the priority intervention areas in the Revised Indicative Strategy Development Plan 2015-2020 (RISDP) as well as the SADC Industrialisation Strategy and Roadmap.
SADC Deputy Executive Secretary for Regional Integration, Dr Thembinkosi Mhlongo, said during the opening of the SADC Industrialisation Week in Windhoek that SADC and the rest of Africa’s industrialization has fallen below targets as most countries remain on the margins of industrialisation.
“This is exemplified in the very low and declining shares of their manufacturing value added (MVA) in GDP and in their low MVA per capita which lag well below the country averages for developing countries. In 2014, Africa’s MVA accounted for only 1.6 percent of the global total. For its total portfolio of exports, Africa adds value to only 14 percent compared to 27 percent and 31 percent for Asia and developed economies, respectively,” Mhlongo said.
“In the specific case of SADC, the manufacturing sector contribution remains paltry at less than 13 percent and has recently been on the decline.”
Mhlongo said lack of industrialisation is one of the reasons why intra SADC and intra Africa trade figures remain low.
He said intra SADC trade, though fluctuating, has consistently remained around a paltry 10 percent, which is very low compared to other regions like the South-East Asian Nations (24 percent) and the European Union (40 percent) while intra-African trade has remained at around 15 per cent of Africa’s total trade over the past decade.
“This implies that 90 percent of trade in SADC is with the rest of the world, while it is 86 percent in the case of Africa.”