Farmer's Weekly (South Africa)
GLOBAL INSIGHT : Will Namibia’s fish industry capitalise on AGOA?
Almost halfway into the current 10-year iteration of the Africa Growth Opportunity Act (AGOA), the US and its sub-Saharan African partners have not worked out a comprehensive post-AGOA reciprocal trade agreement.
Like every other sub-Saharan African country, Namibia does not adequately utilise AGOA due to several challenges. Some analysts argue that the closure of the Ramtex garment and textile factory in 2005 started the marked decline in Namibia’s exports to the US. The factory’s closure translated into lost export revenue of about US$100 million (about R1,47 billion) per year.
Could the fish industry fill this gap and become Namibia’s lead sector under AGOA?
Namibia’s overall exports to the US continued a downwards trend, dropping 60%, from US$192 million (R2,83 billion) in 2008 to US$120 million (R1,77 billion) in 2018. Namibia’s fish industry has followed the same trend, with exports to the US falling from US$12,4 million (R183 million) in 2001 to US$194 000 (R2,86 million) in 2018, a decline of 24,3% per annum since the inception of AGOA.
REASONS FOR THE DECLINE
The decline in fish exports over the past two decades has been significant for a number of reasons:
• The dominance of the EU, mainly due to historical ties, trade agreements and supply chain networks.
• Most companies in Namibia’s fish industry have a Spanish interest or shareholding, which means the Spanish market is a priority for most of Namibia’s fish industry. • The main fish exported by Namibia, Cape hake, is not a preferred product in the US market, as it is perceived as a low-value fish for the low-income segment of the market. It is therefore difficult to increase the price of hake on the US market.
• The Alaskan and Southern pollock, which are familiar varieties, set the price for the US market, and tend to be extremely competitive.
• The US consumes mostly hake fillets and rock lobsters (tails) form Namibia.
However, Namibia’s rock lobster sub-sector has not been doing well, and does not have the quantities to meet the demands of the US market. The only strategy to capitalise on the US market would be to look at niche markets for lobsters. • Namibia has been producing, on average, 200t of rock lobster per year, which is much lower than South Africa at an average of 2 600t per annum.
• A moratorium was placed on the exporting of the orange/red roughy or slimehead (deep sea perch) to the US a decade ago and has not yet been lifted.
• For the rest of the fish, if Namibia’s market share in the US market is to increase, it means exports would have to be diverted from existing markets and channelled to the US. There is a limit to how much the industry can grow, which is set by the existing stocks of fish, and the maximum sustainable yield (MSY), which is equal to what the industry takes out minus the fish mortality rate. Overall, the Namibian fish sector is a mature industry that has reached its MSY. • However, hake is yet to reach MSY, and growth projections suggest that the industry will take about 20 years to attain it.
• The government has set specific fishing quotas, and these are capped to ensure that the fish population can be replenished.
INCREASING EXPORTS
Given these factors, the Namibian fish industry can take a number of steps to increase the utilisation of AGOA.
The first would be to cultivate more strategic partnerships with US-based firms that could help to develop markets for Namibian fish products. In order to do this, the Namibian government and the Confederation of Namibian Fishing Associations should come together and support companies to participate in the annual Seafood Expo North America in Boston, Massachusetts.
Namibia’s new industrial policy that focuses on value addition presents an opportunity to carve a strategy for the US market, by focusing on the high-value retail markets and exporting finished products.