Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN) Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN)

Unleashing the potential of the agriculture sector in Namibia
Bank of Namibia
22 September 2006
Postrick Mushendami, Ben Biwa, Mihe Gaomab II
Bank of Namibia

Acknowledgements: FANRPAN acknowledges permission from the authors to post this document on our website.

Executive summary

The objectives of this paper are to look into the factors that have been causing the decline in the agricultural growth with a view to identify products that have the potential of increasing the output of the sector. Moreover, the paper is intended to investigate the level of investments required in the sector. To achieve the objectives above, a desk research augmented by field surveys and case studies of other countries were undertaken. The main purpose of the field surveys was to assess the main constraints preventing the sector from reaching its full production potential, identify existing opportunities, as well as the levels of investments required in order to increase the output of this sector. The surveys were administered to about 14 key bodies and institutions which represent the interests of farmers in the country. The sampling criterion was more judgmental and based on the fact that the selected institutions are in better position to know the existing constraints and opportunities in the sector given their close contact with the farmers.

In addition to the field surveys this paper used case studies so as to learn from the experience of Malaysia, Kenya and Zambia on the policies they embarked upon in their quest of unleashing the potential of their respective agricultural sectors. The selection of these countries was underpinned by the fact that, similar to Namibia, Zambia and Kenya had dualistic agricultural structures at independence and had to institute policy interventions to achieve growth and equity objectives in the respective agricultural sectors. As for Malaysia it was due to the fact that Malaysia is a major producer of palm oil which among other things produce bio diesel. This therefore ties well with the ambition of Namibia to produce bio diesel.

From the paper it became evident that Namibia is characterized by a dualistic agricultural sector, where a strong commercial sector exists along with a sector of households in freehold and non-freehold areas. This dualistic character of the sector has been inherited from the apartheid regime. What concern policymakers is the fact that the share of the agricultural sector to GDP (11.7 percent during the period 1990 to 1997) in Namibia is not only lesser than the average for the Sub-Saharan Africa (30.0 percent on average during the corresponding period), but has also deteriorated from 6.9 percent in 1999 to 5.4 in 2003. Moreover, the share of agriculture in the labour force has been sliding from 49.0 percent in 1990, to 29.3 percent in 2000. Furthermore, its performance has been sluggish, registering declining and negative growth rates sometimes. This is in spite of a number of policy interventions that were implemented in the sector.

Despite the observed sluggish performance the paper observes that the agricultural sector remains one of the key pillars of the Namibian economy given the fact that, it is a provider of food, employment, incomes, foreign exchange in the economy. Moreover, it creates demand for capital investments and increasing productivity of workers. The agricultural sector also supports other sectors such as transport, manufacturing, plastic packaging and etc. For example, the agricultural sector sustains about 70 percent of the Namibian population, either directly or indirectly. Moreover, in 2004 the agricultural sector accounted for 11.5 percent of the country's total foreign exchange earnings of the country, about 39 percent and 19 percent to the country's total maize and wheat consumption requirements respectively. Moreover, it supplied about 100 percent of total beef, mutton and peal millet consumption, as well as contributing 2 percent to total manufacturing output of Namibia. Based on the above back ground, the importance of the agricultural sector within the Namibian economy cannot therefore be overemphasised.

The paper found that, the agriculture sector is constrained by factors such as less availability of marketable animals, unavailability of markets for some products, lack of economies of scale, high input and transport cost, lack of finance, climatic and weather conditions, competition, exchange rate volatility, unavailability of farm lands, lack of skills and fresh produce markets, scattering of producers and unsynchronised transport system.

The paper further found that, beef, sheep, goat, poultry, mahangu, grapes, jatropha curcas, hoodia, cactus pear, avocados, banana, beans, beetroot, broccoli, butternuts, cabbage, carrots, chilli, cucumber, dates, lemon, lettuce, mango, naartjies, onions, oranges, pears, pineapples and potatoes have the potential for growth in the agricultural sector. The investment required in the sector is estimated at about N$885.9 million. It was also found that Namibia enjoys a comparative advantage in the production of the products identified above and should therefore increase their production.

More over, the paper drew the following lessons from the case studies: In all the countries Malaysia, Kenya and Zambia, respective governments intervened in the agricultural sector through various policies such as giving support to the small holder farmer's, broadening access to finance, provision of infrastructure and investing in research. Moreover, in Kenya the government instituted a land distribution programme. In Malaysia the success of palm oil was also due to the country's comparative advantage. Despite these interventions, output in Kenya and Zambia increased initially but latter started to decline. In the case of Zambia the decline in output was brought by a host of factors more particularly drought, privatisation, cattle diseases and removal of subsidies on maize and fertiliser. It should however be pointed out that of recent agricultural growth has started to pick up in Zambia on account of continued government focus on food security, diversification and the opening up of new agricultural productions areas. In Kenya, the decline in the growth of the agricultural sector is attributed to inefficiencies in marketing, limited land expansion of small holder farming, limited development and use of new technologies, deteriorating infrastructure, low investments, and bad weather. Not withstanding the decline in the growth rates, the agriculture sector remains imperative as employment creator, earner of foreign exchange and contributor to GDP in these countries as well as in Namibia.

In order to unleash the potential in the agricultural sector, the paper recommends the following:

  • Concerted efforts should focus on expanding production of beef, karakul and horticultural products in the communal areas.
  • Marketing as well as promotion of products such as grapes, processed goat meat, bone in beef and dairy products which are in dire need of new markets should be strongly emphasised.
  • Modernization of the rural areas by putting in place proper infrastructures in the form of roads, electricity, marketing facilities and feedlots are strongly encouraged.
  • The current efforts by the green scheme to increase production of agricultural products through irrigation methods is commendable, however it is recommended that emphasis should rather be placed on the production of crops in which Namibia has a comparative advantage more particularly horticultural crops.
  • The recent regulation by the Namibian Agronomic Board, to compel retailers to source 15 percent of their supply of horticultural as an import substitution strategy is commendable. If supply warrants, it is recommended that the domestic outsourcing requirements could be increased in the future. Moreover, efforts to encourage the local consumption of Namibian products such as that of Team Namibia are greatly encouraged.
  • Within the commercial areas it is recommended to intensify the de-forestation with a view to increase the carrying capacity of the land.
  • With regard to the State Land acquisition policy of The Ministry of Lands and the Affirmative Action Loan Scheme of the Agribank, the two institutions should re-looked into the issue of farm lands evaluation to avoid unnecessary competing demand for lands. A mechanism of proper coordination between the two institutions in this particular aspect should be adopted.
  • The land policy must be implemented in such a way that it dispels uncertainties' to farmers, areas earmarked for resettlement must be defined clearly, and resettled farmers should be grouped into clusters. These areas should be equipped with the necessary infrastructure and be near by the markets to enhance productivity.
  • Investments in the projects such as Karakul sheep farming, grapes, hoodia, jatropha, processing of grape products should be intensified.
  • Furthermore, research in agriculture is strongly encouraged. In addition to research, there is a need to enhance the productivity of agricultural workers by introducing tailor made agricultural training in the rural areas.

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