Namibia’s sustainable agricultural growth is being stifled by drought, currency woes, low prices, high-interest rates, and global competition, a new study finds.
The study conducted by researchers Salomo Mbai and Utjevera Tjiramba, on unpacking factors impacting foreign direct investment (FDI) in Namibia’s Agricultural Sector, established that other factors including limited credit, investments, and climate change also weigh on the sector.
Investment constraints are primarily attributed to insufficient domestic savings and the reliance on financial aid funds, states the study.
“Namibian investors struggle to achieve significant returns due to high utility costs and underdevelopment in the sector, while South African multinational corporations gain a competitive advantage,” the researchers said.
“Thus, sustainable and inclusive policies should be geared towards attracting inbound FDI flow in agricultural infrastructure, research, and development with the aim to enhance productivity, profitability, and long-term sectoral growth.”
The research further uncovered that the domestic policy regulatory framework and government’s scepticism towards private investments are the primary factors influencing FDI at 46.7%, followed by the high utility and transportation expenses (26.7%), access to inexpensive financial credit (26.7%), and economic uncertainty (26.7%).
The further expansion of foreign investments is hindered by the scarcity of raw resources (6.7%), local restrictions (6.7%), and the size of the domestic market.
“In addition, Namibia’s investment expansion is hindered by limited ease of doing business, lack of incentives, land access, and infrastructural challenges, suggesting the need for sustainable innovative strategies to attract FDI,” the studysays.
Looking at policies, the research found that the European Union regulations hinder dairy and agro-processing business participation in their market, while a lack of policies establishing local product standards affects export.
It was further established that inefficiencies in agricultural technology use are exacerbated by inadequate training for farmers, insufficient domestic market, and insufficient regulatory environment, affecting efficient and fair competition with other markets.
