Over the last century, a web of trade has
developed between countries, and it is largely responsible for the economic
development we’ve seen globally since the mid twentieth century, due to the
economic theory of comparative advantage. In short, it postulates that certain
economic actors can produce certain goods or services at a lower opportunity
cost than others. To maximize economic output, then, it makes sense to produce
that which a certain country can produce at lower cost than anyone else and
export it, and then import those goods which can be produced by other countries
at a lower cost.
To maximize economic benefit, then, every
nations imports some goods and services and exports others. These two do not
always match, however, and this mismatch is called the balance of trade. The
balance of trade is a large part of a country’s current account – which not
only includes trade, but also capital flows in and out of an economy. Usually,
countries produce a trade surplus during economic boom times, and then records
a deficit during tougher times.
Namibia is no exception, with government’s
trade policy aimed at developing, promoting and diversifying the country’s
exports while reducing our reliance on imports. It is therefore quite important
that we monitor our trade to see if government is, in fact, successful in its
stated endeavours. Let’s then examine the Annual Trade Statistics Bulletin
compiled by Statistician General Alex Shimuafeni’s Namibia Statistics Agency to
see what trade occurred during 2017.
During 2017, Namibia’s exported N$ 63.5
billion worth of goods, while importing N$ 87.9 billion, leaving us with a
total trade deficit during the year of N$ 24.4 billion. As such, we’ve
effectively exports locally created wealth abroad. While we saw an improvement
in the trade deficit from 2016 of 18%, it remains a fact that Namibia now
consistently has a trade deficit, instead of a trade surplus, every year since
2008.
Let’s take a look at exports and imports
individually. Namibia’s largest export market, as usual, is the Southern
African Customs Union, with N$ 23.4 billion exported to that group of countries,
or 39% of our exports. In second place is the European Union, with N$ 14 billion
in exports (24%), then the European Free Trade Area (basically Norway, Iceland,
Switzerland and Liechtenstein) with N$ 8.6 billion in exports (14%), followed by
non-SACU SADC with N$ 5.4 billion (9%) in exports, and finally, the Common
Market for Eastern and Southern Africa (COMESA) contributing 7% in exports and
BRIC (Brazil, Russia, India, China) contributing 6% .
When we take a look at the individual
countries we export to, South Africa comes out top with N$ 15 billion exported
to, or 24% of our exports, with Botswana at N$ 8.4 billion (13%), Switzerland
another N$ 6.5 billion (10%), China with N$ 3.3 billion (5%) and Belgium with
N$ 3.2 billion (5%). Together, these 5 account for 58% of our exports.
For Botswana, unsurprisingly, our exports
are mainly diamonds, and while South Africa also receives diamond exports (38%
of our exports to them), we also export live animals (16%), fish (9%) and
beverages and spirits (5%) amongst others. For Switzerland, we can see that 90%
of our exports are copper ores and copper blisters. This seems to be the result
of the Louis-Dreyfus Group, based there, that via its subsidiary, Dundee
Precious Metals, acquired the Tsumeb Smelter, and seems to be importing copper
to Namibia for smelting before re-exporting. We mainly export ores as well to
China (54%) but in addition, China also receive a lots of our exports of zinc
(30%). Belgium mainly receives exports of diamonds (49%) and copper blisters
(19%) from Namibia, in addition to a sizable amount of zinc (17%).
In terms of imports, the SACU is by far the
largest source of imports, with N$ 54.8 billion imported, or 66% of our imports.
The EU is second with N$ 11.4 billion (14%) imported, then the BRIC countries
with N$ 7.1 billion (9%) imported, and COMESA with N$ 4.7 billion imported (6%).
Taking a look at the individual countries we import from, South Africa stands
at N$ 49 billion, accounting for 56% of our imports, with Bulgaria at N$ 5.8
billion (7%), Botswana at N$ 5.4 billion (6%), China at N$ 4.5 billion (5%),
Zambia at N$ 4.2 billion (5%)
From South Africa, we source vehicles, electrical
and mechanical appliances and equipment as well as most of our manufactured
products and pharmaceuticals, as can be expected. This remains the main reason
the Namibian dollar cannot delink from the Rand. Botswana’s imports are 94%
diamonds – most likely re-imported after processing there. From Bulgaria and Zambia
we imported copper ore and copper blisters – for smelting, as mentioned above. From
China we get electrical and mechanical appliances and equipment as well as
other articles of iron and steel, which can be expected, seeing as their
products remain quite popular here in Namibia.
The data has now been turned into
information, and the picture it paints is not positive when we consider the
government’s trade policy. Our exports are still primary resources. Our imports
are manufactured products. With a country that is struggling economically, why
are we not encouraging the development of local manufacturing ability? Why can
we not process these primary resources we’re exporting first, and export
manufactured product to try and reduce our trade deficit? We need to start
developing our own manufacturing industries, so we can export more to cover our
imports. Until we do, we’ll simply keep exporting our natural wealth – and when
that runs out, we’ll be up a creek without a paddle.
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