In the late 1990’s the government of Namibia embarked on a strategy to stimulate economic growth through the export of processed goods. In fact, the Namibian government went further by signing into law the Economic Processing Zone Act of 1995
. At the heart of this law was an attempt by the government of Namibia to give priority to certain sectors of the economy, specifically manufacturing where companies in the business of processing finished goods are incentivised to produce and export more of their goods. The incentives ranged from corporate tax holiday, to free repatriation of profits by companies operating in the Export Processing Zone (EPZ).
The latter incentive was aimed at attracting foreign investment into Namibia. However, the ultimate aim of setting up the EPZ was to help create at least 25,000 jobs for Namibian citizens. Almost fifteens years down the line, the EPZ strategy seems to have failed to deliver on the job-creation goal, with less than 1000 jobs created by companies operating within the EPZ. There are a number of reasons why the Namibian EPZ experience has proved less successful than originally planned. Firstly, legislation and incentives alone clearly have not been enough to ensure that exports really drive economic growth.
. At the heart of this law was an attempt by the government of Namibia to give priority to certain sectors of the economy, specifically manufacturing where companies in the business of processing finished goods are incentivised to produce and export more of their goods. The incentives ranged from corporate tax holiday, to free repatriation of profits by companies operating in the Export Processing Zone (EPZ). The latter incentive was aimed at attracting foreign investment into Namibia. However, the ultimate aim of setting up the EPZ was to help create at least 25,000 jobs for Namibian citizens. Almost fifteens years down the line, the EPZ strategy seems to have failed to deliver on the job-creation goal, with less than 1000 jobs created by companies operating within the EPZ. There are a number of reasons why the Namibian EPZ experience has proved less successful than originally planned. Firstly, legislation and incentives alone clearly have not been enough to ensure that exports really drive economic growth. SA must learn from Namibia
Other factors lacking in Nambia’s EPZ plan were government’s failure to invest in the improvement of its infrastructure to make it easier for businesses in the EPZ to carryout business. The country’s geography and climate, which is mostly desert and hot may have had a contributing factor. Another perhaps key factor missing in Namibian EPZ strategy was a focus on investment in the education and development of skills necessary to drive the business within the EPZ. All these factors on their own or together may have conspired to put paid to Namibia’s attempt to use exports as a mechanism to grow its economy. South Africa’s exports are still lead largely by resources such as gold, platinum and coal. Exports of processed manufactured goods make up a very small percentage of total exports and have a small impact on the economy of South Africa. Taking lessons from the Namibian experience, SA desperately needs to develop a strategy to grow is exports of manufactured goods in order create more jobs and earn valuable foreign currency.
No comments:
Post a Comment