Namibia’s Minister of Industrialisation, Trade and SME Development Tjekero Tweya has said that the country will have to impose a mandatory ‘buy local’ policy for retailers to cut its import bill. Namibia currently imports 96% of its fruit and wheat.
The minister was responding to a question in parliament about what the Namibian government was doing to reduce the country’s import bill. This is a familiar picture in several markets: Algeria, Sudan and Nigeria have all taken steps in recent years to cut import bills by banning or restricting the importation of certain goods – either to protect foreign currency reserves and/or try to stimulate local production.
Namibia faces a massive challenge because the country is highly dependent on South African agricultural and processed foods. According to Namibian Agronomic Board (NAB) statistics, during the 2017/18 financial year Namibia imported 96% the fruit, 96% of its wheat, 60% of its pearl millet and 40% of its white maize from abroad – much of it from its neighbour.
There is a $1.5bn gap between imports and exports. However, the data are misleading. Around half of Namibia’s exports are re-exports, with little to no value added between import and export. In other words, Namibia’s economy is heavily dependent on imports.
Is a mandatory ‘buy local’ policy realistic? We don’t think so in the short term. Namibia can’t magic up new farming and processing capacity overnight. Any restriction of imports would meet with consumer resistance because it will raise prices of core products such as bread, fruit and vegetables – even if Namibia were to be able to install the necessary agricultural and processing capacity. All the major supermarket chains rely on South African supply chains (apart from Woermann Brock, all the leading supermarket chains are South African).
However, we do see ‘buy local’ (or, more accurately, ‘make local’) becoming a key government priority because of the trade deficit. Food imports and foreign retailers are easy political targets, especially for any populist government. As such, we expect more examination of how dependent Namibia is on South African suppliers and retailers. At the very least, supermarket chains will seek to highlight the Namibian products they do stock, to be seen as doing their bit to support local producers.
