Economic Empowerment

• Overview
  
• Improved Private Sector Competitiveness
  
• Job Creation
  
• Training of Youth
  
• Increased Trade and Investment
  
• Regional Trade Opportunities

Overview As Namibia moves into its second decade of independence, early optimism regarding the country`s ability to rapidly overcome the legacy of apartheid has been tempered by serious concern that the needs and expectations of a substantial portion of the population are not being met. With a continuing under- and unemployment rate of around 60 percent and only one-fifth of the 20,000 Namibian school-leavers each year finding jobs, the Government of the Republic of Namibia (GRN) is vigorously seeking ways to accelerate income growth and job creation. This is not only an economic issue, but a political issue as well. In seeking to spur economic growth, Namibia has much in its favor. Among its strengths are political stability, an economy that the Heritage Foundation rates as one of the most open in Africa, and highly developed infrastructure, including a port that is a gateway to southern African markets, well paved highways, and a modern telecommunications system. Moreover, the nation is rich in natural resources. It is endowed with diamonds, uranium, lead, gold, copper, zinc, prolific fisheries, soon to be exploited natural gas, and some of the most spectacular and varied scenery and wildlife in the world. Despite these advantages, economic growth has essentially stalled over the past several years. Indeed, most sources report declines in real GDP per capita and the current growth rate is only marginally ahead of the population growth rate. The conditions under which most historically disadvantaged Namibians (HDNs) live are not significantly better than those of most other countries of Sub-Saharan Africa, with almost half of Namibians living in poverty. In 2003, Namibia ranked 124th (of 175 countries) on the United Nations` Human Development Index Report, the components which include income, literacy and life expectancy. By way of comparison, neighboring South Africa ranked 111th. Perhaps more disturbing than Namibia`s poor economic performance is the country`s distribution of income, generally recognized as the most unequal in the world. In the U.S., the top 20 percent of earners earn just over 40 percent of all GDP. Namibia is far more skewed than its neighbors, with the top 20 percent of income earners making 77 percent of GDP. Mirroring this is a sharp imbalance in the distribution of skills among Namibians. The scarcity of adequately trained and skilled managerial and technical staff among HDNs continues to be a constraint, both to enterprise creation and to growth at all levels and sizes of firms. Moreover, these inequalities contribute to the pronounced differences in capacity within Namibia`s private sector, between white, family-owned firms and by affiliates of South African firms, and the often weak enterprises owned by historically disadvantaged Namibians. Back to Top Improved Private Sector Competitiveness In 2005, USAID provided direct support to SMEs to increase their productivity through improved business and financial management, marketing, and business planning. The two projects provided business development assistance that directly benefited 318 SMEs. To strengthen these enterprises, the two USAID-funded projects provided a wide range of business development services through training, corporate mentorship, and support to Business Service Organizations (BSOs) that directly worked with the program-supported SMEs. Forty-six BSOs participated in providing business development services and 6,053 SME owners and their staff (2,243 men and 3,710 women) received services and training in various aspects of private sector growth and development. Key business development services provided to the SME owners and their staff included: business management, marketing, export promotion, book keeping, using IT for business communications and for accessing demand-supply information, and preparing tenders and loan applications. The overall impact of business development services was evident in the value of sales transactions that increased to $4.866 million from $1.4 million in 2004. Back to Top Job Creation Job creation is one of the main objectives of USAID’s SME and regional trade development programs. In Namibia, opportunities for job creation are extremely limited and approximately 60% of the eligible workforce is unemployed or underemployed. Although creation of new jobs is a priority in an environment of high unemployment, maintaining existing jobs is equally important. USAID-supported SMEs often allude to survival as an equally important objective to growth. The USAID supported private sector programs created 238 new jobs (target 100), while 853 overall number of jobs were created and/or maintained in 2005. These results can be attributed to effective business development services and advice provided to SMES that helped the growth of SMEs, and perhaps even prevented the collapse of some of the SMEs. Program-funded Business Support Organizations (BSOs) assisted 2,386 SME clients in 2005 --an increase of 289% from the previous year. Over 1,005 SME clients applied or utilized skills acquired through activities implemented directly by the implementing partners and by program-supported BSOs, compared to the target of 350 clients. Back to Top Training of Youth The USAID-funded youth training activity trained 472 (381 male and 91 female) unemployed youth in skills critically needed by the construction and building industries in Namibia (carpentry, plumbing, welding and bricklaying). The trained youth, generally high school drop-outs, are then able to work as self- employed entrepreneurs and contribute to the growth of private sector, while filling an important skills gap demanded by the building and construction industry. USAID also sponsored internships for hotel and hospitality management skills training in the U.S. for 10 under-graduate students of the Hotel Management School (Polytechnic of Namibia). This was accomplished through a Global Development Alliance (GDA) partnership between USAID, a consortium of three U.S. Community Colleges and the hotel-tourism industry in Florida and Hawaii. Back to Top Increased Trade and Investment Significant progress was made in providing 318 program-supported SMEs (39% men and 61% women) various services to access and increase trade in domestic and regional markets and to develop linkages with larger firms. These services resulted in development of 283 Business-to-Business partnerships between SMEs and larger firms, and 1,760 business transactions. As a result of these sales transactions, USAID-supported SMEs reported an increase in trade valued at $4.866 million compared to $1.4 million in trade deals reported in 2004--an increase of 347.57% for assisted enterprises. This is an impressive result by any standard. These results demonstrate substantial progress in linking large and smaller Namibian businesses (SMEs), which indicates that the Namibian private sector is achieving progress in integrating domestic business and regional trade activities--a precondition to national and global competitiveness. Twelve large corporations participated in the Corporate Program implemented by the project that contributed to the SMEs linkages with large corporations in Namibia. As a result of Business-to-Business partnerships and linkages with larger firms, program-supported SMEs were able to obtain supplier credit from wholesalers, compete successfully for public and private sector tenders, and increase business transactions. Back to Top Regional Trade Opportunities In 2005, increased support was provided to the Namibian SMEs to participate in regional trade opportunities. USAID’s assistance to export-oriented SMEs focused on increasing value-added services and improving the competitiveness of their products. Seven women-owned SMEs participated in two regional trade fairs in Angola, while 7 textile sector SMEs participated in a program that linked them with South African firms importing textiles and/or outsourcing production. The NRTP assisted SMEs reported 1,310 export sales transactions, of which 408 were accounted for by the women-owned SMEs. The program also facilitated 84 commercial loans and credits to targeted SMEs from banks and large wholesalers, and off-shore direct investment valued at $1.41 million. Back to Top