By Hilary Mare
INSTITUTE for Public Policy Research (IPPR), Research Associate, Klaus Schade, has questioned the accuracy of national trade statistics, while calling for a review of some of the methods used to derive trade related input data.
In the September edition of Economy Watch Namibia, a research paper on the Namibian economy compiled by Schade, and financially supported by the Hanns Seidel Foundation, Schade highlights that there is a need to review the way import sources and export destinations are recorded by Customs and Excise, which provide the Namibia Statistics Agency (NSA) with the data for the trade statistics.
Explaining why this is so, Schade used the following as way of illustration, “According to the Annual Trade Statistics for 2016, Switzerland was Namibia’s main export destination, because of the export of copper ore and copper cathodes. Total trade with Switzerland amounted to N$13.3 billion, while the value of copper ore and copper cathodes was recorded at N$12.4 billion. Swiss trade statistics, in contrast, recorded total imports from Namibia at N$12.1 million (Swiss Franc 816 932) and the value of imported copper ores and concentrates at N$35.783 (Swiss Franc 2 417).
“The possible explanation for this huge difference is that the headquarters of Glencore, one of the largest commodity traders, is based in Switzerland. While Glencore buys and sells commodities, such as copper and copper cathodes, the products are not destined for Switzerland, but most likely for East Asia,” he said.
Schade went on to say that this is not just an academic exercise, but will have ramifications for trade missions and trade negotiations.
“Switzerland is part of the European Free Trade Association (EFTA) that has signed a Free Trade Agreement with the Southern African Customs Union (SACU). The EFTA ranked as the third most important economic region for exports, for most quarters. Total exports to the EFTA amounted to N$2.02 billion, of which 99.6 percent was destined for Switzerland. Furthermore, 81.5 percent (N$1.6 billion) of total exports to the EFTA consisted of copper ore and copper cathodes. Since these products are actually not exported to Switzerland, in reality the EFTA plays a less important role as an export destination for Namibian products than the current records suggest. Accurate trade data is vital to inform our trade negotiations and trade delegations,” he said.
Schade explained further that the quarterly trade statistics only include the trade of goods, but not the trade in services. Namibia usually records a positive trade balance in services, and hence, the overall trade deficit for the second quarter should be lower than N$6.1 billion.
“The magnitude of the trade deficit remains of concern, since it drags on the foreign exchange reserves. The foreign exchange reserves are currently at comfortable levels, due to the inflow of repatriated investment abroad, and loans in foreign currency that Namibia recently received.
“This should not lead to complacency, since the loans have to be repaid, and investment abroad can only be repatriated once. Usually, Namibia levels out the trade deficit with the transfers from the Southern African Customs Union Common Revenue Pool, as well as foreign investment. It is therefore important to design policies that have the potential to attract foreign investment.
“The current ongoing review of the Namibia Investment Promotion Act, as well as the draft Namibia Equitable Economic Empowerment Framework, are steps in the right direction, in order to establish Namibia as a destination for foreign (and domestic) investment,” he said.
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