Monday, 23 August 2010

Our Big Brother – South Africa

South Africa used to be our colonial master. The ant-apartheid struggle in South Africa was also our struggle. Many of us have family on both sides of the Orange River. We import most of our consumer goods from South Africa. Our money, the Namibian Dollar is directly equal to the Rand. All, but one, of our banks is South African owned. These are facts we must accept, there are the good, the bad and the difficult things in this relationship.

The Good
Namibia is a member of the oldest custom union in the world, namely the Southern Africa Customs Union (SACU). The members are Botswana, Lesotho, Namibia, Swaziland and South Africa.

Being part of a customs union means that all goods brought into the Union will face the same amount of customs duty. More importantly, all goods produced by any member will not face duty when sold in one of the other member countries.

In effect this means a company can choose to produce in Durban, Port Elizabeth, Gaberone, or Oshakati and have the same access to all the consumers in our countries. The only difference is in the local labour or services, transport costs between markets, and the quality of life in each of these locations.

So, Namibia should have an active investment promotion policy to:
a) attract companies wishing to penetrate the southern African market; and
b) encourage South African companies to open factories in Namibia

To do this will mean preparing a comparison list to other localities in the region, and making sure we are the first choice in all regards. It is important to remember that all aspects, such as the quality of education available to children at the investment location, can be pivotal in decision-making by the management who have to relocate.

SO HOW BIG is the Namibian Market? The Namibian market consists of more than 200 million people – all residents of SACU are our market.

The Bad
Just like any big brother, South Africa can sometimes use its muscle to bully the smaller states in the Union. This can lead to companies “protecting” their markets by using dumping for example to prevent a business from being able to establish itself locally. Because of a larger range of products, companies can also insist retailers do not stock any of their competitor’s products. This has happened in the case of candles, toilet paper, cement, school desks, to name just a few.

Namibia must use the facility (already written in the SACU agreement) to protect its infant industries.

At the same time, I must warn about the measures sometimes used to protect local industries. In the early 1990’s the government enacted regulations to stop empty glass bottles from leaving Namibia. This was to protect our local Namibia Breweries. It was possibly a good measure, but inadvertently has led to a pollution problem. If you investigate any of the glass bottles being thrown away, you realise bottles are all from foreign bottlers. The reason, only Namibian Breweries offers a refund and reuses their bottles – the others cannot take the empties across the border.

The Difficult
Our dependence on South Africa also means that when something goes wrong there it affects us directly. If the World Cup is held in RSA, we receive indirect benefits, but when there is a political problem, we also receive the negative coverage.