Oshikango still on its knees

The Oshikango business community is now calling for a trade agreement to supplement the currency deal, which has failed to revive the ailing border town.

12 September 2018 | Business

The 2014 currency-conversion agreement between the Bank of Namibia (BoN) and the Angolan central bank has failed to revive the once thriving trade at the border town of Oshikango.

The Oshikango business community is now calling for a trade agreement to supplement the currency agreement. Oshikango was once the busiest border town in the country but in the 2010s it became a ghost town as cross-border business with Angolans, which ten years ago generated about half a billion dollars a month, all but collapsed.

This was a source of concern to the BoN. After doing research it found that trade between the two countries used to be conducted in US dollars, and that a shortage of that currency had caused a decline in trade.

This prompted the Namibian central bank to negotiate the currency-conversion agreement with the Banco Nacional de Angola.

The agreement allows people to legally export either Namibia dollars to Angola, or Angola kwanza to Namibia, and exchange them for local currency for trading purposes.

The managing director of International Commercial and Oshikango Bonded Warehouse, Ayman Hijazi, told Namibian Sun that the economic slump at Oshikango had not improved in the four years since this agreement.

“The situation remains the same and due to the current economic situation in the two countries very few people are buying, and also in less quantity, than in the past,” says Hijazi.

“Due to this effect on the buying power many businesses are suffering and cannot pay employees' salaries and other business commitments.”

Hijazi said there are some Angolan customers who are willing to buy their products, but they are being failed by their banking system which cannot provide enough cash. He said they had proposed to the BoN to consider a suitable electronic payment system between the two countries.

The exchange rate has also gone down; N$10 can only buy 185.99 kwanza at the moment, he said.

“There are customers coming in requesting quotations but once they go to their commercial banks in Angola to release money it becomes a problem. Their banking transfer system is a challenge and it frustrates, while their credit cards are also limited. We are losing out on potential buyers in that way,” he said.

“This agreement must be revised. It must be a trade agreement instead of a mere currency-conversion agreement.”

The chairperson of the Namibian Chamber of Commerce and Industry (NCCI) northern branch, Tomas Koneka Iindji, says although many Namibians also flock to Oshikango to buy goods, most of the items are destined for export and cannot be sold locally. “Many businesses at Oshikango, which falls under the Helao Nafidi town council, are warehouse bonded. That place is part of the Export Processing Zone (EPZ) regime. Trading activities are aimed for the export and not the local market,” says Indji. Indji urges the business community at Oshikango to stay put while the NCCI and the Helao Nafidi town council explore alternative measures to rescue the local economy.

ILENI NANDJATO

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