Govt to buy local only

27 May 2019 | Economics

Economists say banning imports to promote local small and medium enterprises would be self-defeating unless the government helps SMEs to grow large enough to compete with international companies.

On Thursday, finance minister Calle Schlettwein announced that public entities would no longer be allowed to import bottled water, vegetables, fruit, poultry, cleaning materials, toilet paper, dairy products, seafood, fish, meat and meat products.

According to the minister the directive is a measure to enable local participation in the economy and enhance domestic productive capacity within the framework of the Procurement Act of 2015.

University of Namibia economics lecturer Omu Kakujaha-Matundu warns that while this is a noble idea, it must go hand in hand with increased support for local businesses.

“Government must become innovative and I do not see that drive. Local business does not have the local economy of scale like countries such as South Africa who can lower the costs of their products.

“Now one thing is that these businesses will have to increase their skills in order to increase their ability to export their goods to international markets, and that is where government comes in,” he says.

He warns that if local companies are unable to substitute the imports that were banned by the directive, it could hurt the Namibian economy.

“It is not that straightforward,” he says. The chairperson of the Namibia Chamber of Commerce and Industry northern branch (NCCI-NB), Thomas Indjii, welcomed the directive, saying Namibians must “hold hands” in these trying times.

He agrees that government support is not as it is should be and emphasises that institutions such as the Namibia Standards Institution must help local companies to improve the standards of their products instead of punishing them for not meeting standards.

“It is very good news. We have young people that are selling these products locally and they are struggling. But what we would like to see is that this directive will enable us to get local products such as mahangu on the shelves of local supermarkets,” he said.

Indjii said the government must help local businesses to increase their capacity and to obtain financing.