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Textile factories also close in Swaziland

A worrying trend with Asian textile factories closing down in southern Africa is now affecting Swaziland and could also impact on Namibia. Two weeks ago PLUS reported on the plight of Lesotho textile workers. This week thousands of jobs are at stake in Swaziland due to cheaper garment imports from China to the US, leaving southern Africa behind. The Swazi government estimates that a third of all garment industry jobs will be lost by June due to the crisis facing textile firms, according to the UN news service IRIN. Some 45 000 jobs were created since 2001 but about 15 000 might get lost. Robert Maxwell of the Textile Exporters Association in Swaziland said none of the 10 major textile companies in the country, which are largely Taiwanese-owned,
had received orders for the second quarter of 2005. Some factories closed
for the holidays 2004 and have not reopened yet.

The clothing industry of Swaziland and Lesotho took off in 2000, when Asian investors opened factories to take advantage of the US trade benefits from the
African Growth and Opportunities Act (AGOA). It permits Swazi, Lesotho and Namibian exports to enter the American market without paying import taxes. However, this price advantage has been cancelled out by a 50% rise in the value of the South African rand against the US dollar. All 3 currencies are linked to the rand. To make matters worse, the World Trade Organisation’s (WTO) agreement on textiles and clothing removed US quotas from 1 January 2005. It means that textile giants like China now have freer access to the US market. Asian companies had set up factories in Namibia, Swaziland and Lesotho to use AGOA to sidestep the WTO quota restrictions.

"The Chinese have the price advantage because of low wages - a Chinese
worker gets about R427 a month; a Swazi worker earns twice as much: R915," Maxwell explained, according to IRIN. Swazi labour unions complain that garment workers can scarcely scrape by on their salaries, while being subjected to unhealthy working conditions.

Cultural misunderstandings have also led to conflict. Last month 450 workers striking for better salaries and working conditions attacked Taiwanese managers at one factory. All strikers were fired. Meanwhile 3 of the 6 textile factories in Lesotho, which closed down in December 2004, might reopen. About 7,000 clothing and textile workers’ jobs were in danger when the factories, failed to reopen in January. According to IRIN News, the Lesotho government wants to provide even more tax incentives to the mostly Chinese-owned factories. The government hopes to save at least 5,000 jobs if the 3 factories operate again. Lesotho is dependant on the largely Asian-owned textile industry, which employs 56 000 workers. The textile sector comprises of over 500 companies and contributes about 10.5% to the GDP.

Namfish suspended from NSX

The strong Rand against the US dollar over the past 2 years is taking its toll in the fishing industry. With the factory of Blue Ocean Pty Ltd at Walvis Bay closed since Christmas and looming retrenchments at Cadilu Fishing a third company y has sailed into troubled waters. The Namibian Stock Exchange (NSX) approved an application from the public company Namibian Fishing Industries (NamFish) for a voluntary suspension of the trading of the company’s securities on the NSX with immediate effect. The reason was that NamFish has been adversely affected by poor catches, depressed market prices and by the impact of currency exchange rates on its exports, the NSX announced. NamFish was already delisted from the Johannesburg Stock Exchange (JSE) in 2003 due to problems. The company is now considering various options concerning the viability of the company and a further announcement regarding these developments will be made in 2 weeks. The group’s results for the interim period ended 31 October 2004 have been delayed. NamFish has at least 10 subsidiaries and 6 joint ventures with mainly Black Economic Empowerment (BEE) companies. Old Mutual Life Assurance has about 14% shares in NamFish, Sea Harvest Corporation 34,5% and Frans Indongo Trust has 32,8% shares.

Zimbabwe faces serious food shortage

Food security for about 5.8 million citizens in Zimbabwe is at risk due to poor harvest, humanitarian workers said this week. Urgent food imports depend on the ability of the Harare government to import enough grain to cover a production deficit, according to the UN news service IRIN. The Famine Early Warning Systems Network (FEWS NET), which is funded by the US, last week stated 5.8 million Zimbabweans - almost half the population - were in need of food aid. In its overview of food security threats in sub-Saharan Africa, FEWS NET said the situation in Zimbabwe was "deteriorating", and the availability of staple food was declining while market prices are rising.
The minister of lands, agriculture and rural development, Joseph Made, said the opposite. "Those claims from the West are simply because we
have embarked on an anti-Blair campaign for our elections, and they can see the land is in our hands. This is a clear signal of how desperate they are", the state newspaper, The Herald, quoted the minister. Made said 370,000 metric tonnes of grain were distributed by the government besides 400,000 t kept as "strategic reserve". The government declared that Zimbabwe produced 2.4 million t of maize last year, against a national requirement of about 1.8 mt, but a report by its parliamentary committee on agriculture said by October 2004, only 388,558 mt were sold to the Grain Marketing Board (GMB) of the government.

Windhoek City Starts Property Evaluations

Officials from the Windhoek municipality have embarked on a new round of property evaluations since this week lasting until early August. Property owners are requested to cooperate with the officials by allowing them access to premises. The officials must identify themselves at all times to owners. The last property evaluation was in the year 2000. According to the Local Authorities Act, properties must be re-evalued every 5 years. Further enquiries can be made at 061-290 2320 or 290 2501.

Bank Rates Could Drop Next Week

The Monetary Policy Committee of the South African Reserve Bank meets next week to decide on short-term interest rates. There is a strong possibility of an drop of between 0.25 to 0.50 percent in short term rates, Old Mutual Namibia’s CEO said. The arguments in favour are the strong rand, recent favourable Consumer Price Index figures, still high real prime rate and the inflation going done, Johannes !Gawaxab told a business briefing on Wednesday.

There were however arguments against a cut in interest rates which might result in the Monetary Policy Committee keeping rates unchanged. These were strong credit growth, booming demand for credit and credit extension, declining savings, the current account risk and uncertainty around the oil price, the CEO of Old Mutual noted. Turning to the Namibian situation, !Gawaxab said the government had to be cautious since 62% of its debt – some N$ 5.8 billion - matured in the next 12 months, meaning it has to be repaid.

The basic laws of economics thus urged Namibia to aggressively seek alternative sources of revenue, reign in public expenditure, and attract foreign direct investments and to improve its tax collections, he added. "The collection of VAT is not what it could be, it is in fact declining, also because many companies opt for EPZ status and are thus exempt from VAT or can claim it back for goods bought". Another negative factor was that Namibia would receive some N$ 540 million less each year over the next 12 years in revenue from the customs union, SACU.

On a positive note, !Gawaxab said the year 2004 produced excellent investment returns for retirement funds in Namibia. The average balanced pension fund earned over 25% during the 12 months to December 2004.

"On a macro-level, the fiscal autho-rities had to intervene – not having an additional budget – to curb public expenditure. This should be welcomed and appropriate steps should be taken to assist the fishing industry which loss more than N$400 million during 2004 due to a stronger Namibia dollar and oceanic and market conditions which resulted in small fish being caught.

!Gawaxab contends that the Namibia dollar might moderately depreciate towards N$6.40 later in the year.