Minister of Agriculture, Water, and Land Reform, Carl Schlettwein, has detailed the pre-requisites for Namibia’s agricultural sector to thrive and anchor the sector into the value chains map.
Addressing delegates at the 25th Bank of Namibia Annual Symposium last week, Schlettwein identified meaningfully recognising agriculture as a national priority and according such priority through deliberate resource allocation across all facets of the value chain as a key enabler.
He noted that at 2.3% of total non-interest expenditure and about 0.7 percent of GDP in 2024/25, budgetary allocation to agriculture falls far short of recognising agriculture as a high national priority, a matter that must urgently be aligned.
Second, Schlettwein pointed towards investment in water resource development, distribution infrastructure, and sanitation with the objective of providing secure, reliable, and affordable water supply required for the transition from rain-fed agriculture to intensive and climate-smart agriculture, thus re-risking the sector from climate change and variability.
He further noted that an allocation of about 1% of total non-interest expenditure is grossly insufficient to support both SDGs for food and water security and must be significantly improved.
In his third pre-requisite, the Minister noted investment in primary, logistical, and supportive infrastructure to address supply-side challenges and product quality considerations.
“These range from abattoirs, processing plants, and feedlots in the livestock sector to grain and cold storage infrastructure for fresh food and marketing hubs in the agronomic sector and IT infrastructure,” he said.
Fourth on his list is the provision of consistent and broad-based support services, particularly the veterinary and agricultural extension services, and a targeted national subsidy program on the back of a robust research and development program, digitalisation of some of the services, and mechanisation of production systems.
This is followed by secure, affordable, and reliable power provision. Power and water availability and affordability are key input factors for the fortunes in the sector.
“Our experience is that the cost of energy often rockets out of the affordability range for farmers, particularly for the small-scale farmers. This binding constraint limits increasing returns to scale and productive diversification in the sector.”
Lastly, he recommends diversifying market access to achieve economies of scale and expansion of the domestic productive capacity.
“Namibia has gone at great length to invest in some of the above prerequisites, setting the basis for leveraging regional and international value chains. This had the effect of addressing domestic supply-side constraints across the value chains and promoting access to domestic, regional, and international markets. However, let us pause briefly and take stock of some of the glaring impediments.
“The small market size of Namibia is providing little advantage in terms of economic scaling. At the same time, producers have to bear high transport, logistic, and input costs due to long distances to and from markets. Competitiveness with regional global producers is severe. The SACU arrangement perpetuates Namibia as a captive market for South African finished products (such as food) and agricultural inputs, while at the same time it hinders Namibian ambitions to industrialise,” explained the Minister.
Currently, about 70% of all consumables in Namibia are imported from South Africa. Current trends show a deceleration of agroprocessing. Public industrialisation and marketing entities that were created with the correct intent to facilitate an economic transition towards value chain development and industrialisation in the agricultural sector, without exception, failed to deliver.
“MEATCO, AgriBusDev, AMTA, AgriBank, and NIDA all had the mandate to support farmers and entrepreneurs, but unfortunately became a burden to them instead. Serious uncompetitiveness and mismanagement created financial constraints, which were rolled onto their farming clientele. The financial service sector (banks and insurances) remained a risk-averse and most expensive service provider to entities in the agricultural sector. Further, the financial services industry product offerings to the sector are not the most tailored and not the most inclusive and broad-based due to adverse selection. The absence of a sustainable targeted agricultural subsidy program nationally coupled with the absence of tailor-made financial service offerings and, at times, the moral hazard problem tend to leave the farmer saddled with debt,” said Schlettwein.
The sector contribution to GDP amounts to an average of 6 percent over the past five years, and as the sector contends with the impact of climate change, volatility in monetary policy, and variable industry growth, real growth averaged 4.6 percent over the same calendar.
“It is showing some resilience, defying the adverse impact of COVID-19 on the economy, holding growth steady, and enabling the country to build back better. Direct employment in the agricultural sector is estimated at approximately 20%, the single most important sector in terms of the job content with less skills demand, hence the high potential for inclusion and erosion of poverty through growth in the sector. Adding the food sector, the percentages edge towards 50%,” he concluded.