Manufacturing is an important catalyst for economic expansion and development. To date this sector has contributed approximately 14.5 percent towards the GDP with an average growth rate of 6 percent per annum.
Major investments in the manufacturing sector have included processing of marble and granite, meat processing, tanneries, fish and marine processing, packaging, cement production, plastic moulding, dairy products, salt refining and flour milling.
The Development Bank of Namibia has been instrumental in the financing of major projects and assists with equal deals, franchising, mezzanine finance and bridging finance.
Government policy is to stimulate the expansion and diversification of the manufacturing sector through packages of incentives and tax breaks for manufacturers.
Benefits for manufacturing companies include reduced corporate tax and exemption for paying Value Added Tax (VAT) when importing machinery and equipment. For the first 10 years, manufacturing companies only pay 18 percent before it reverts back to the normal 35 percent. These businesses can also negotiate with the Ministry of Finance on the ‘Negotiable Establishment Tax Package’ and can receive cash grants when they want to market their products overseas.
While the size of the domestic markets is still mall, the potential regional markets of the Southern African Development Community (SADC) and the Southern African Customs Union (SACU) are large and Namibia has the infrastructure to reach them. Crucially the regional markets are growing quickly with the growth of a new middle class. Those benefits are already attracting several significant international investors.
Activities in the manufacturing sector in Namibia have to a great extent been concentrated in the food sub-sector which has accounted for an average of 44.8 percent of the total manufacturing output.
The second largest sub-sector within manufacturing included sub-sectors such as textiles and leather goods; wood; paper and printing; chemicals and plastics; non-metallic minerals; basic metals; fabricated metals and machinery and equipment.
The fish processing sub-sector has also represented a significant share of the manufacturing sector in the country, accounting for an average of 20.0 percent of the sector, while meat processing is the smallest contributor to the sector with a share of 5.8 percent. There is evidence of linkages between the economic sectors of Namibia and the manufacturing sector through inputs being generated from the agricultural (i.e. meat for processing, milk for dairy products) and the fishing (i.e. fish for processing) sectors in particular.
In addition to the above products, Namibia has also ventured into the production of value added products such as textiles and clothing, the polishing and processing of diamonds, as well as the refining of copper and zinc. This new area of the manufacturing sector of the country has created the strongly desired backward and forward linkages within the Namibian economy, particularly with the mining sector.