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Miss Universe beckons tourists.

In an effort to reduce unemployment and attract foreign investors, the newly re-elected Government is establishing a full-scale export processing zone (EPZ) in the harbour town of Walvis Bay. In the meanwhile, Namibia is bracing itself for a tourist invasion during the Miss Universe pageant to be held this month.

Fortified by its overwhelming victory in last December's elections, the ruling Swapo party is confident political stability and a favourable business climate will facilitate significant inflows of foreign investment. This has so far mainly been channelled into the fishing industry and tourist developments. While some economic diversification has resulted, the predominant source of export revenues and major contributor to GDP remains the mining sector, which is vulnerable to unpredictable fluctuations in demand on the world market.

But with unemployment at over 30%, there is an urgent need to provide additional long-term jobs. The sectors offering the most potential are fishing and manufacturing. The reintegration of Walvis Bay harbour, its surrounding enclave and 12 offshore islands in March last year has provided Namibia with new opportunities to develop the central coastal region as a dynamic growth point for the whole economy. Investment in onshore whitefish processing has already exceeded N$800m ($145.5m) in the past three years, while suppliers of inputs to the fishing industry are establishing new local capacity.

Walvis Bay harbour is mainly used for Namibia's sea-borne trade but has the potential of becoming an international trade gateway for the region. A sign of confidence was the decision by South Africa's MacPhait Holdings to build a N$20m ($3.6m) bulk cargo terminal which on completion in mid-1995 will increase the efficiency of handling operations at the port by 30%.

But to take advantage of liberalised global trading conditions under the Uraguay Round, countries such as Namibia whose exports are predominantly unprocessed, must find ways of increasing the export of value-added products. To this end, the Government carried out an evaluation of export processing zones (EPZs) elsewhere, particularly those of Mauritius, and in March, the Namibian Parliament passed an Act authorising an EPZ in Walvis Bay.

This enables the formation of "EPZ enterprises" engaged in manufacturing, export or import activities, which will pay no income tax on their activities, while customs duty and sales tax will be entirely waived provided products are not sold in Namibia.

The Trade and Industry Minister Mr Hidipa Hamutenya, says the aim is to create up to 10,000 new jobs over the next five years. Textiles, electronic components and value-adding to local raw materials are the primary targets. A new Offshore Development Company is being set up, initially as an arm of the Government's existing Investment Centre, and like the Mauritius Offshore Business Activities Authority (MOBAA) will promote the EPZ internationally to investors. A new offshore financial regime allowing investors to operate largely free of foreign exchange controls is also planned.

Casino culture

The Government is also currently pulling out all the stops to maximise spin-off benefits from the US-organised Miss Universe beauty pageant in May. This is being staged for the first time in Africa and to accommodate the event which is expected to be seen by some 650m global television viewers - the country's first five-star hotel and entertainment complex is nearing completion. The N$80m ($14.5m) Windhoek Country Club complex is only the latest venture of the South African company Stocks and Stocks, which last December opened a N$45m ($8.2m) four-star hotel and Namibia's first casino in the resort town of Swakopmund. Prime Minister Hage Geingob, has urged Namibian firms to take full advantage of the event.

The Government anticipates the number of foreign tourists may exceed the 300,000 mark for the first time. The legalisation of gambling last year has led to criticism that the government is promoting a "casino culture" - however, both hotels are providing direct employment to 500 Namibians and attracting high-spending foreign tourists.
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Title Annotation:Namibia
Author:Murray, Roger
Publication:African Business
Date:May 1, 1995
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