An Assessment Of The Impacts Of Export Processing Zones On Namibia’s Socio-Economic Growth

Abstract

This study attempts to assess the impact of the Export Processing Zone (EPZ) programme in Namibia. Using data from the country’s EPZ programme authorities, the central bank, relevant studies, and country reports, the study shows that although the programmes have facilitated employment generation and foreign exchange earnings from manufacturing and exports, such exports rely highly on the mining processing sector such as diamond cutting, polishing, as well as zinc refinery. The reliance on mining process, and the uncertainty regarding the continuation of such mining are important sources of vulnerability. This causes fluctuations in investments and also helps explain the low level of backward linkages. This is especially evident in the case of Ramatex. Several factors hamper larger investments, such as high labour unit costs, high electricity prices, lack of affordable business and industrial premises, lack of rough diamond are some of the factors affecting the production performance of EPZ enterprises in Namibia. However, Namibia’s EPZ programs should to a greater extent target industries and services in which they have good prospects of developing a competitive advantage, regardless of trade preferences, which provide good opportunities for human capital and technology transfers, and which generate backward linkages. The study emphasizes on the need for the scheme to be reviewed, and be aligned to its main purpose. The main problem is that capital-intensive industries seem to have low rate of employment compared to labor-intensive industries. Quality infrastructure and supporting services also play a vital role in attracting investors. The study further looks in the overall overview of tax incentive and non-tax incentives aimed at attracting more investment to Namibia. The study in general evaluated the potential impacts of the EZP regime in Namibia, and concluded by giving recommendations which the relevant government ministries as well as institutions can consider.