David Nuyoma, chief executive officer of the Development Bank of Namibia (DBN) describes the intent and aspects of the 2011 Industrial Policy: Namibia has taken several key steps to realise Vision 2030, the aspiration for the country to be industrialised by 2030. The establishment of Export Processing Zones and introduction of the Sites and Premises Programme are public investments geared towards promoting industrialisation. Other enabling legislation, such as the Foreign Investment Act and the launch of manufacturing incentives, are efforts to realise industrialisation and economic transformation.
The Development Bank, the SME Bank and re-engineering of the Namibia Development Corporation (NDC) over the past decade, also shows the Government's commitment to grow the manufacturing sector.
These institutions were created to address a financing gap, which saw commercial banks' provision of credit to the manufacturing sector averaging two per cent between 2004 and 2010.
Much, however, remains to be done.
Besides the 1992 White Paper on Industrial Development, there is no clear policy driving the country's aspiration to attain industrialisation. The Industrial Policy of 2011 is in draft form and the hope is that it will be launched soon.
The fundamentals of the policy are anchored in Vision 2030: it sets out to achieve targeted sectoral development and creation of an environment that will foster industrialisation. The policy presents the manufacturing and services sectors as major growth engines and also has 'green' growth and sustainable manufacturing as central themes.
Following the principles of the policy, the DBN believes that the following should be considered in further development of the Policy:
- An economic discount rate that will serve as a guide for all industrial financing decisions pertaining to government-driven projects' or investments' required rate of return;
- Configuration and coordination of financing entities such as the DBN, SME Bank and NDC with some adopting a role of debt financier and others assuming either an investment promotion role or one related to development of equity capital;
- Introduction of the National Venture Capital Fund, which will assist in providing risk capital for smaller industrial projects and stimulating green investments in particular;
- Augmentation to the Ministry of Trade and Industry's Industrial Upgrading and Modernisation Programme with a Manufacturing Competitiveness Enhancement Fund to provide relevant financial support to graduates of the Upgrading Programme;
- A review of the country's Export Processing Zone regime, with the aim of working towards establishment of Special Economic Zones across the country to attract investment in unproclaimed and communal areas. The establishment of economic zones will also address issues related to leasehold regimes and other factors inhibiting investment in these areas.
Increased globalised competition necessitates the development and implementation of structured and well-designed approaches to industrialisation. This requires countries to develop and implement structured and well-designed approaches that draw on comparative and competitive advantages. Countries need to cement backward and forward sectoral linkages, and develop appropriate policy frameworks that can enable investment or finance in the relevant sectors, as well as technology and skills transfer.
However in order to make use of a policy, certain challenges have to be acknowledged and dealt with in a pragmatic manner. These include:
- Acquiring relevant technical, vocational and managerial skills: if you don't have them, import them while you develop skill for long-term sustainability.
- Market access, which includes direct consumer patriotism, such as those promoted by Team Namibia; having public procurement as a dedicated and deliberate tool to promote industrial development; and development of export markets.
- Having a robust institutional framework in place: the regulatory regime should be sensitised to the need for efficiency to facilitate business. How quick are we with facilitation, for example?
- Common purpose: one of the key ingredients of the Asian Tigers' rapid progress was their stance on smart partnerships, which relates to the realisation that success in industry is good for public well-being. Constructive, sustained dialogue in all spheres of society is therefore a necessity.
- And, finally, we should remember that financing follows viable businesses. Development of an entrepreneurial culture is therefore critical to any debate on financing to progress industrialisation in Namibia.
The elements of the 2011 policy are a sound basis for financing industrial projects that meet both financial and economic requirements of an industrialised future, but it is up to Namibian bodies and enterprises now to take the policy a step further, to address the immediate challenges and build a reality from the blueprint.