No man is an island, they say, but this is
perhaps even more true for countries. We do not stand alone from our
neighbours. 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, however, managed to record trade
deficits ever since quarter 3 of 2012, peaking at a trade deficit per quarter
of almost N$ 12 billion in the second quarter of 2015. Clearly when a country
consistently imports more than it exports, it effectively exports locally
created wealth abroad. It should therefore be of great concern to us when the
Statistician General Alex Shimuafeni releases trade statistics via the Namibia
Statistics Agency and reveals that over the last few years ( 10 quarters ) the
Namibian trade deficit has grown by 49.9% Let’s take a look at the Quarterly
Trade Statistics Bulletin for the second quarter of 2017, then.
In the second quarter of this year, our
trade deficit was N$ 6.2 billion, showing a deterioration of 26.8% from the
first quarter. This is the result of N$
20.1 billion in imports, versus N$ 13.9 billion in exports, with the drop in
exports since the first quarter the leading reason for this change. Over the
last 5 years, the trade deficit averaged N$ 6.7 billion per quarter, mostly due
to Namibia’s demand for high-valued manufactured commodities and machinery,
while all we were exporting was primary goods.
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$ 4.8 billion exported to that group of countries,
or 38.1% of our exports. In second place is the European Union, with N$ 3.3
billion in exports (26.1%), then the European Free Trade Area (basically
Norway, Iceland, Switzerland and Liechtenstein) with N$ 2 billion in exports
(15.8%), followed by non-SACU SADC with N$ 1.1 billion (8.8%) in exports, and
finally, the Common Market for Eastern and Southern Africa (COMESA) with N$ 984
million (7.2%) in exports.
When we take a look at the individual
countries we export to, South Africa comes out top with N$ 3.1 billion exported
to, or 22.7% of our exports, with Switzerland another N$ 2 billion (14.5%), Botswana
at N$ 1.7 billion (10.1%), Spain with N$ 886 million (6.4%) and Belgium with N$
758 million (5.4%). Together, these 5 account for 61.4% of our exports. Strangely,
“Belgium” is the rudest word in the universe, which is "completely banned
in all parts of the Galaxy, except in one part, where they could not possibly
know what it means,” according to the Hitchhiker’s Guide of the Galaxy, but I
digress.
For Switzerland, we can see that 81.8% of
our exports are copper ores and copper cathodes. 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 from
Zambia to Namibia for smelting before re-exporting. The rest of our exports to
Switzerland are, unsurprisingly, diamonds. Belgium (my apologies to sensitive
intergalactic readers), mainly receives exports of Diamonds (59.8%) and Zinc
(38.8%) from Namibia, while Spain is mainly a recipient of Namibian Fish, which
amounted to N$ 778 million in this quarter, compared to N$ 993 million in the
first quarter.
In terms of imports, the SACU is by far the
largest source of imports, with N$ 13.6 billion imported, or 71% of our
imports. The EU is second with N$ 2.1 billion (11.2%) imported, then the BRIC
countries with N$ 1.4 billion (7.4%) imported, COMESA with N$ 1 billion
imported (5.2%), and Non-SACU SADC at N$ 974 million (5.1%) imported. Taking a
look at the individual countries we import from, South Africa stands at N$ 12.1
billion, accounting for 60.4% of our imports, with Botswana at N$ 1.3 billion
(6.9%), Bulgaria at N$ 897 million (4.4%), Zambia at N$ 872 million (4.3%), and
China at N$ 752 million (4.7%).
From South Africa, we source vehicles,
boilers and most of our manufactured products as well as pharmaceuticals, as
can be expected. This remains the main reason the Namibian dollar cannot delink
from the Rand. Botswana’s imports are 94.5% diamonds – most likely re-imported
after processing there. Bulgaria provided us with N$ 872 million worth of
products from animal origin, while from Zambia we imported copper ore – for
smelting, as mentioned above. China, of course, also provides vehicles and
boilers and manufactured products, as can be expected, seeing as their products
remain quite popular here in Namibia.
The data does not paint a pretty picture,
does it? Namibia is still quite dependent on exporting raw materials to fund our
economy, but our growing populace wants more manufactured products than we can
afford, and so our wealth is exported to the world. We still do not have
adequate capacity to process our own diamonds, given the diamond trade with
Botswana. And we remain quite dependent on South Africa for our supply of
manufactured goods. We need to start developing our own manufacturing
industries, so we can export more to cover our imports. But I guess there’s one
bright spot – at least our country is not called Belgium.
