Namibia’s long term development goal is to be “a prosperous and industrialized country, developed by her human resources, enjoying peace, harmony and political stability” by 2030.

The manufacturing sector plays a strategic role in economic development and is a component of industry that presents greater opportunities for sustained growth, employment, and income inequality and poverty reduction.

Manufacturing activities in the country are concentrated in the subsectors of meat processing, fish processing, other food and beverages, and mineral beneficiation. The latter largely represents the smelting of copper and zinc ore, and the cutting and polishing of rough diamonds.

Manufacturing has been identified as an economic priority in the National Development Plan as well as in the “Growth at Home” strategy with “Promotion of local value addition” being the most important feature in the strategy. Namibia’s Industrial Policy aims at improving export competitiveness, increasing domestic production and creating an enabling environment for industries.  

The manufacturing sector plays a strategic role in economic development and is the component of industry that presents greater opportunities for sustained growth, employment and poverty reduction, in Namibia’s ambitions to industrialize. While the size of the domestic market is small, the potential of regional markets of its membership to SACU and SADC ensures access to a market of over 55 million and 300 million people, respectively.

The government has also signed various preferential free trade agreements with a number of countries, including the SADC region. The country therefore has the potential of engaging in the production of other manufactured products which are currently not being produced, as this allows for potentially larger market access for locally produced products.

The Namibian tax free EPZ regime got off the ground effectively in 1996, after the proclamation of the Export Processing Zones Act (Act No. 9 of 1995) in 1995 and its amendment in 1996 (Act No. 6, of 1996). Key objectives of the regime included: (i) attraction, promotion or an increase of the manufacture of export goods; (ii) the creation or increase of industrial employment; (iii) the creation or expansion of export earnings; (iv) the creation or expansion of industrial investment, including foreign investment; and (v) the encouragement of technological transfers and the development of management and labour skills in Namibia.

Since the inception of the EPZ regime in Namibia, the country has attracted a significant interest of both the local and international investment communities. This was because the EPZ regime has been regarded as a vehicle for the export led industrialisation of the Namibian economy. The incentive package it provides is wide-ranging and very competitive. Since its inception, entrepreneurs from around the world have applied for participation in the regime. Some of the foreign sources of investment in the Namibian EPZ regime are China, the USA, Britain, Germany, India, Canada, and South Africa, amongst others.

Companies that have been granted an EPZ status can set up operations anywhere in the country. In addition, there are specially developed industrial parks where they can enjoy the same advantages. Through the Offshore Development Company, the EPZ enterprises also have access to factory facilities which are leased at reasonable rates. An EPZ enterprise may choose to become either an independent factory located anywhere in Namibia, or an enterprise within an industrial park or estate run by a management company. These parks are located in most top towns.

EPZ enterprises are engaged in diverse economic activities such as the manufacturing of acrylic products, the manufacturing of car parts, the rebuilding and reconditioning of motor vehicles, the polishing of diamonds, electric and electronic components, the refining of zinc, tanning of leather, clothing, kitchenware, teddy bears, candles, copper processing and internet related services. There are no restrictions on the development of the industrial sector. Any form of manufacturing or value-added process is eligible, provided it is focused on exports outside the Southern African Customs Union (SACU).

The Government introduced incentives for manufacturing enterprises in 1993. The incentives offered to manufacturing concerns take two key forms, namely; tax incentives provided for, under the Income Tax Act (Act No.24 of 1981) as amended by Acts No.10 of 1993, No.17 of 1994, and No.12 of 1996 on the one hand. On the other hand, there are also non-tax incentives offered to manufacturing enterprises. Tax and non-tax incentives apply equally to local and foreign companies registered as manufacturers and are provided for both existing and potential entrepreneurs operating in the manufacturing sector. The key objective for providing incentives to registered manufacturers is to give Namibian based entrepreneurs who invest in the manufacture and export of these goods, a competitive edge.

Manufacturing companies are engaged in various economic activities within the manufacturing sector which entail, the manufacturing of items such as chrome, aluminium, fish meal, fish oil processing, pharmaceuticals, bricks and interlocks, plastic bottles, books and plastic papers amongst others. The companies which benefit from the incentives scheme must apply to the Ministry of Trade and Industry, while final approval lies with the Ministry of Finance. It is therefore, expected that revenue consideration plays a crucial role in approving the manufacturing status of a given company.

In Namibia, the SME sector takes a lead in the drive towards greater beneficiation and value addition to Namibian raw materials. Given the nature of the country’s raw material endowment, the limited size of the domestic market and the structure of our industries, the greatest opportunities for growth in Namibia lie in the small business sector and manufacturing of niche products for export. Consequently, manufacturing is supported by means of access to finance and markets, as well as business advisory services, SME modules, common facility centres and vendor development programmes.

In addition, the policy makes reference to diversifying activities away from low value-added, crowded activities, such as hawking or catering and emphasises the importance of demonstrating commitment to manufacturing, crafts, trades and other industrial businesses and the increase of their representation amongst SMEs to 30 percent.

There is an acknowledgement in the manufacturing industry that the Government has done well in marketing Namibian products overseas, but it is felt that concerted efforts should be made to explore the Asian market, particularly for the sale of leather products.

Despite its acknowledged role, the Government is expected to play an important task, especially in negotiating trade agreements with the rest of the world. This could facilitate tariff preferences for Namibian products in international markets. Manufacturers also expect the Government to create opportunities to market their products through participation in international trade exhibitions (i.e. trade fairs) and related international trade missions. It goes without saying that the Government is expected to promote industrial products both in the local market and overseas so that these markets gain confidence in products manufactured in Namibia. Efforts aimed at promoting the consumption of Namibian products, include Team Namibia.

In addition to this, the Government, is expected to create a favourable environment in which manufacturers could operate efficiently and effectively. Issues which the Government could consider in this regard include: the relaxation of tender regulations (to make it easier for local companies to obtain Government tenders;) and specifications (i.e. specify tender regulations by taking into consideration the situation of Namibian companies), tax concessions for manufacturers (i.e. proposals were made by the industry to introduce a lower tax rate for manufacturers along the lines of Botswana, where manufacturers pays a special rate of 15 percent). If a lower tax rate for manufacturers was introduced, the Government would have to remove the incentives for manufacturers and exporters, given the fact that a lower corporate tax rate for manufacturers would be an incentive for the industry.

Namibia provides preferential incentives for manufacturing, particularly those that add value to raw material.

It provides access to 16 SADC member states, with an estimated population of 330 million. The Walvis bay Corridor Group, overseas transport corridors to SADC markets. Namibia has also duty and quota free access to the Southern Africa Customs Union (SACU).

A wide range of trade agreements have been signed with regional economic blocs of the African continent and other global trading partners. Chief among these are AGOA with the USA, the EU-EPA and the Cotonou Agreement between the European Union and ACP states.

This is the implementation arm of Namibia’s industrial policy. The strategy aims at industrialising Namibia over the next 20 years, and focuses on three central ideas:

• Support value addition, upgrading and diversification for sustainable growth
• Secure market access at home and abroad
• Improve the investment climate and conditions

It aims at expanding the benefits of economic growth to a larger part of the population and to encourage local production. The charter will address the denial of retail space directly and assist producers with marketing and quality control. There is still significant potential for value-addition to products of the primary industry sectors and for manufacturing development in general. Among the projects are:

• Fertiliser production (including the use of local phosphates)
• Feedlotting in the cattle industry
• Fish and pet food production
• A game meat processing plant
• A meat processing plant for northern Namibia
• Processing of locally produced vegetables into sundried, canned or concentrated products
• Processing of medicinal plants
• Processing of skins and hides into leather products
• Development of the Zambezi sugar and energy project
• Edible oil and margarine production from sunflower and safflower
• Production and processing of dates
• Setting quality standards for products, packaging and labelling and introducing local certification.

The manufacturing sector has become Namibia’s hope to achieve and maintain a sustained economy. With the 1993 introduction of tax incentives for manufacturers and the SACU agreement, signed in 2002, that makes provision for infant industry protection, it’s no doubt that government is committed to supporting the growth of the manufacturing sector.

Government wishes to have a manufacturing sector together with a services sector contributing approximately 80 per cent to the gross domestic product (GDP) by 2030.