The SADC Trade Related Facility (TRF) assisted Namibia’s Industrial Upgrading and Modernisation Programme (IUMP) with the awarding of industry grants to qualifying enterprises. Fifty companies were identified and subsequently awarded out of 295 applicants. The IUMP is an agenda of the Ministry of Industrialisation, Trade and SME Development aimed at improving production and supply capacity, efficiency and competitiveness of Namibian owned manufacturing firms.
The IUMP was established as a national extension of the sub-regional IUMP for SADC, with the objectives of improving the competitiveness of local industries; contribute to the strengthening of industrial capacities of Namibian Small and Medium Enterprises (SMEs); diversify national value-addition; enhance capacities for job creation; support efforts that reduce poverty; and to achieve long-term presence in the international marketplace.
The programme provides targeted support in areas such as diagnostic studies and upgrading plans; supply and value chain analysis and management; technical training and coaching; product and market development, standards and quality management of new operations and maintenance techniques in the production cycle; production costs analysis; product upgrading; quality control and organising production lines among others.
Government’s decision to establish the IUMP is based on its objective to significantly improve the current status of the Namibian manufacturing sector. Currently, the manufacturing sector accounts for about 10% of Namibia’s Gross Domestic Product (GDP). Yet, it is the largest employer in the productive sector after agriculture. Therefore, the Government of Namibia recognises the important role that manufacturing has in achieving its long-term developmental goals.
Manufacturing-sector strategies for Namibia’s Fifth National Development Plan (NDP5), the third five-year implementation plan towards Vision 2030, include increasing manufacturing and value addition; creating value-chains of production; increasing labour productivity; imports substitution for agro-processed goods and developing a comprehensive economic incentives framework.
Therefore, the desired outcomes have been identified for increasing the contribution of the general manufacturing sector from N$17.8 billion (about US$1,2 billion) in 2015 to N$20.8 billion (US$1,4 billion) by 2020 and further increasing the contribution of the manufacturing sector in combination with other non-government services sectors to 60% of GDP and achieving a competitiveness score of 4.2 by 2020.
Unfortunately, Namibia’s target of being the most competitive economy in Africa received a setback when the country’s ranking on the World Economic Forum’s Competitiveness Index fell by six places to 90 in the 2017/18 report. This placed Namibia as the seventh most competitive economy in Africa, one place lower than in 2016/17. The country’s score fell from 4.02 in 2016-17 to 3.99 in the 2017/18 report. However, in the 2018/2019 report, Namibia significantly improved to a score of 4.0 that inches the nation closer to its target of 4.2. Namibia is now third on the continent, second to Mauritius and South Africa respectively.
Given the agenda set out by the Government and the aforementioned conditions, Namibia has considerable potential for investment in manufacturing products that are currently not being produced or produced in low volumes. The IUMP’s Industry grant scheme set out to ameliorate Namibia’s level of industrialisation by targeting 11 growth sectors namely game meat and value added wildlife products; hides, skins, leather and wool products; metal fabrication; charcoal and other value added bush products; gemstones and jewellery; cosmetics and pharmaceuticals; fish processing and value added blue economy products; forest-related manufacturing (inclusive of handicrafts); agro-horticultural food processing; dimension stones processing; and the refrigeration and air-conditioning sector.
The evaluation committee of the IUMP concluded the function to enhance productivity and competitiveness of selected firms, focusing on firm level diagnosis and implementation of supply-side interventions under the SADC Trade Related Facility (TRF) Project by evaluating 261 applications. The evaluation and grant scheme fall under Intervention 8: Enhancing Industrial Development; Output 8.2: Interventions to enhance productivity and competitiveness developed and implemented including participation in regional value chains under Activity 8.2.2, and Activity 8.2.3. the financial envelope for the grant. Upon analysis, firms were awarded amounts varying from N$150,000 US$10 714) to N$450,000 (US$32 143) out of a total budget allotment of N$7,720,550 US$551 468) or an estimated €408,000.
Figure 1 Tuli Line Products benefited under the Cosmetics and Pharmaceuticals sector following an impressive application submission
Firms were diagnosed according to their level of readiness to receive the IUMP’s technical support in order to grow their businesses. Firms had to meet basic requirements such as being in operation for at least two years, being a majority Namibian owned entity, maintaining a positive net worth for the year under review and being able to contribute 15% of the grant amount. The interventions under the IUMP grant scheme are either in the form of “soft” or “hard” support, or both, as follows; hard in the form of equipment purchase and soft in terms of technical training; diagnostic studies and developing comprehensive upgrading plans; new operations and maintenance techniques in the production cycle; product development and improvement; marketing and export promotion; technology upgrading; standards compliance and production cost analysis.
Figure 2 Six charcoal producing firms benefited from the grant. Savannah Makara currently supplies South African markets
During the process of firm level diagnosis, the IUMP utilised the database and analysis tool developed for the IUMP and also funded under the SADC TRF Project to capture and track all firms, including the firms that did not qualify for the industry grant yet demonstrated potential. These firms were then referred to EMPRETEC, another project being implemented by the Ministry of Industrialisation and Trade to provide mentorship and business advisory services to micro, small and medium-sized enterprises.
Award winner Mr. Meinholf Hamutenya is the owner of Tumbu Tumbu, a firm that processes a variety of vegetables. Mr. Hamutenya drove 700km from the north-eastern town of Rundu to the capital city, Windhoek, to receive his contract. When asked why he did not simply refer to his regional offices in Rundu, Mr. Hamutenya said, “I wanted to come see you people, face-to-face and look you in the eye when expressing my appreciation. This assistance could not have come at a better time.”
The awarding of 50 enterprises across 13 out of 14 of Namibia’s widely-spread out regions demonstrates the success of the IUMP in selecting firms in a regionally-inclusive manner. This is a noteworthy achievement given Namibia’s large inequalities where wealth and opportunity tends to centre around the capital city, the port city and towns in the northern part of the country. Disappointingly, the large southern region of Hardap did not produce a beneficiary. This situation informs the IUMP that increased strategies to stimulate manufacturing in the southern part of the country is needed for future interventions.
Gender participation in the scheme was encouraging with 18 out of the 50 firms being jointly or wholly owned by women. And, two firms are owned by persons with physical disabilities.
Figure 3 Tameka is a woman-owned jewellery company. This beneficiary has a sophisticated website to promote her products.
The IUMP has learnt valuable lessons from this undertaking to enhance Namibia’s industrial development. The outcomes of this grant scheme and the subsequent coaching and advising are expected to be favourable based on the strong business profiles of the selected firms. The overwhelming response from the business community is indicative of Namibia’s persistent lack of funding for SMEs. According to the Global Competitiveness Report for 2019, Namibia ranks 102 out of 141 countries on the World Economic Forum’s Competitiveness Index in its ability to finance SMEs. Therefore, two processes need to be strengthened. Firstly, it needs targeted interventions that provide sectoral support in order to strengthen enterprises by addressing the key constraints to businesses starting and their sustainability. Secondly, the country needs financial institutions to expand their client base to include more SMEs. In this way, it can better attract and resource Namibia’s SMES as its agenda to industrialise depends on it.
Mr. Mase Mupatami, a young charcoal producer and grant recipient, said that he applied for the grant in order to set up a proper processing plant. He stressed, “SMEs should continue to take advantage of such assistance schemes because the benefits are two-fold. I benefit by growing my business and my clients also benefit from a better product.”
Figure 3 Tameka isa woman-owned jewellery company. This beneficiary has a sophisticated website to promote her products
Name: Nangula Geingob
Title: SADC TRF Project Coordinator (Namibia)
Organisation: Ministry of Industrialisation and Trade
Phone: +264 61 283 7288 (o) +264 81 409 9716 (c)