The Namibia Manufacturing Association (NMA) has urged Government to ensure that manufacturing incentives are properly aligned across ministries, and implemented if the Growth at Home Strategy is to become a success.
In an interview with the Windhoek Observer this week, NMA Chief Executive Officer, Ronnie Varkevisser, also spoke about a range of issues including the finalisation and implementation of the Public Procurement Act Regulations, the high costs of utilities, and the improvement of the VAT refund system.
He said that accelerated growth in the country’s manufacturing sector, can only be achieved if better support structures are provided for key parastatals such as NamPower and NamWater, who have a huge impact on local investment, given the cost of utilities.
“If Government can make sure that the services and administration of these parastatals are efficient and supported, then this will have a huge positive impact on manufacturing,” Varkevisser said.
He added that the lack of implementation of existing Government policies remains the biggest stumbling block to the country’s manufacturing sector, adding that implementation of the country’s Industrial Policy, “would have a huge accelerating effect on manufacturing”.
Some of the key issues that needs to be addressed, according to Varkevisser, include the simplification and streamlining of border procedures, the implementation of the Retail Charter, and the implementation of the Public Procurement Act, which provides for, among others, the preferential procurement of locally manufactured goods.
Varkevisser said full implementation of the Retail Charter, which was launched last year, would help to encourage local value chains, by giving preference to local producers.
He further said that the incentives available to local manufacturers and exporters of manufactured goods are “good, but not sufficient”.
Varkevisser noted that certain key industries, like fish and meat processing, are currently not considered as manufacturers, something which he said needs to be addressed.
He said although some manufacturers qualify for and gain manufacturer status from the trade ministry, they are not always recognised as such by the Ministry of Finance.
“The NMA is of the view that the trade ministry and the Ministry of Finance should align their definitions, so that a person that gets manufacturing status from the trade ministry should only have to go to the Finance Ministry as a formality,” Varkevisser said.
He said improving communication between the two ministries in this regard “would have a huge, positive impact on manufacturing, investment, capacity building and job creation”; given the varied incentives that manufacturers can benefit from, that would allow them to further invest in the country.
In addition to cutting the red tape in gaining manufacturer status, Varkevisser believes there is a need for a more effective VAT refund system, as receiving a refund can take several months, sometimes more than a year.
The Department of Inland Revenue announced in 2013 that it had begun the process to review the VAT refund administration, which it acknowledged is saddled with problems that have also seen some visitors to the country not receiving their VAT refunds.
The then acting Commissioner of the Inland Revenue Department, Sam Shivute, said that the review will see an increase in the threshold for immediate VAT refunds to foreign visitors while the turnaround of the refunds above the threshold will also be improved in an effort to timely respond to claims, among other changes.
Another challenge that manufacturers face is the rising cost of utilities, including electricity and water.
“Because the costs of these utilities are prohibitive for some manufacturers, it is cheaper for them to stay lean, rather than to hire more workers, even at higher production capacity,” Varkevisser said.
In this vein, he suggested that the manufacturing sector should be protected against the high increases in the cost of utilities.
The NMA CEO noted that there is a perception that foreigners, who come into the country to invest, are corrupt, which he said makes the playing field uneven.
“Government needs to look into this and to stamp out corruption,” he said.
Commenting further on the Growth at Home strategy, Varkevisser said that although the trade ministry is doing a very good job to enhance this strategy, there is a belief that their efforts are not necessarily well-aligned with the activities of other ministries and parastatals.
He said there is a need for all ministries that impact on investment, particularly trade, finance, home affairs and education, to share the same focus on the strategy internally, for a more consistent implementation.