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 Trade Statistics Bulletin compiled by
Statistician General Alex Shimuafeni’s Namibia Statistics Agency to see what
trade occurred during the first quarter of the year.
During first quarter of 2018, Namibia’s
exported N$ 18.8 billion worth of goods, while importing N$ 27.1 billion,
leaving us with a total trade deficit of N$ 8.3 billion. As such, we’ve
effectively exports locally created wealth abroad. This is a deterioration from
both the first quarter of last year (N$ 4.8 billion) and the previous quarter
(N$ 5.5 billion). It thus remains worrying 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 has changed in the first quarter,
with the European Union taking the top spot, with N$ 6.2 billion exported to that
group of countries, or 35% of our exports. In second place now is the Southern
African Customs Union, with N$ 5.2 billion in exports (30%), with BRIC (Brazil,
Russia, India, China) rising to third place with N$3.6 billion (20%), followed
by non-SACU SADC with N$ 1.3 billion (8%) in exports, and finally, the Common
Market for Eastern and Southern Africa (COMESA) contributing N$ 1.2 billion
(7%) in exports.
When we take a look at the individual
countries we export to, China took the lead for the first time with N$ 3.4
billion exported, or 18.3% of our exports, with South Africa second at N$ 3.3
billion (17.8%), Belgium another N$ 2.4 billion (13%), Botswana with N$ 1.9
billion (10%) and Italy with N$ 1.4 billion (7.5%). Together, these 5 account
for 67% of our exports.
However, 82% of our exports were from only
5 categories – Copper cathodes (N$ 5.2 billion), Diamonds, jewellery and
precious metals (N$ 4.2 billion), Fish (N$ 2.4 billion), Ores (N$ 2.2 billion),
and Zinc (N$ 1.2 billion). The increase in copper coincided with higher foreign
demand from China and Belgium, while diamonds were more in demand in Botswana.
Ores saw an increase in exports also to China, but France contributed as well,
with Zinc in demand from South Africa and Italy. Fish declined a bit, with the
DRC no longer importing as much from us, but the slack was reduced due to
demand from Spain and South Africa.
In terms of imports, the SACU, in contrast
to our exports, remains by far the largest source of imports, with N$ 12.2
billion imported, or 50% of our imports. Non-SACU SADC is second with N$ 3.9 billion
(16%) imported, then COMESA with N$ 3.6 billion (26%) imported, and the BRIC
countries with N$ 2.4 billion imported (10%). Taking a look at the individual
countries we import from, South Africa stands at N$ 40 billion, accounting for 40%
of our imports, with a surprise of the Bahamas at N$ 3.6 billion (13%), Zambia
at N$ 3.5 billion (13%), China at N$ 1.7 billion (6.5%), and Botswana at N$ 1.2
billion (4.7%)
Notably, 53.5% of our imports came from
just 5 categories – Vessels (N$ 3.7 billion), Copper cathodes (N$ 3.5 billion),
Mineral fuels & oils (N$ 3 billion), boilers (N$ 21.2 billion) and vehicles
(N$ 1.9 billion). Technically, the vessels category is a bit misleading – it
was one vessel, and it instantly catapulted the Bahamas to our second biggest
import market. Copper cathodes are imported from Zambia for smelting and
export, as can be seen in the export statistics. Mineral fuels are imported
from South Africa and India, following a greater domestic demand for it, but
vehicle imports have dropped from South Africa and Germany. Strangely, between
South Africa and China, we’re importing a lot of boilers…
When we take a look at this data, that one
vessel clearly sticks out as an outlier in the data. If we were to exclude it
from the calculation of our trade deficit, we’d find our trade deficit down to
about N$ 4.8 billion – the same as last year, and an improvement from the
previous quarter. Even so, that single import represented a vast transfer of
wealth from Namibia. It would be quite interesting to find out what vessel this
was, and if this asset will generate at least a comparable return for the
Namibian economy. Either way, 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, our current
economic climate will look quite rosy by comparison.
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