There is light at the end of the tunnel for the N$190 million-dollar Peugeot Opel Assembly Namibia (POAN) venture at Walvis Bay as legislation to enable the exportation of the locally assembled vehicles into the Southern African region has been finalised. The exportation of vehicles from the factory, established in 2019, has been marred by an export tariff of 18% as a result of Rules of Origin provisions in previously agreed regional trade agreements. Government owns 49% in POAN whilst global automotive manufacturer, PSA Groupe, owns the remaining 49%.
However, according to deputy executive director in the Ministry of Industrialisation, Trade and SME Development, Michael Humavindu, the trade ministry, with support from the finance ministry, worked on policy solutions which are to be gazetted early this year to ensure the exportation of the vehicles.
Responding to questions from New Era, Humavindu explained that an export tariff had to be imposed on locally assembled cars, which rendered the POAN business model uncompetitive and therefore a solution had to be found.
“The solution is not meant for a specific plant or assembler, but for ensuring the development of the whole sector in Namibia,” Humavindu stated, adding that the policy solution needs to be gazetted to allow the factory to export vehicles to regional markets.
In the meantime, government made the procurement of locally produced goods and services a key support lever for Namibia’s industrialisation path.
Said Humavindu: “Although we don’t have the exact figures, government entities have started approaching the factory and engaged the CEO for possible orders”.
This directive was issued to prop up the assembly plant which has been slow out of the starting blocks and has produced only a fraction of the 5000 vehicles it intended to have assembled by the end of 2020.
“In November 2020, both a board meeting and an AGM were held for the POAN project and relationships continued to ensure that we arrive at the envisaged solution soonest to ensure smoother operations and transactions of the business. The delay in finalising the solution is regrettable, but that is also explained by Namibia as being more than a 25-year laggard in the automotive policy of SACU,” said Humavindu.
The deputy ED continued that Namibia can only learn from the South African experience in the pursuit of a national automotive development plan.
“The South African experience for example learnt belatedly that whilst its objective was value addition and local content enhancement, their setup initially incentivised volumes as opposed to value addition and local sourcing. They, therefore, had to make a few tweaks to their programming of the Automotive Production and Development Programme (APDP).
Their recently adopted SA Automotive Masterplan 2021 to 2035 thus continues the lessons learnt,” Humavindu stated.
He added that SACU member states can all have a derivative of the APDP programme as derived from the original MIDP (Motor Industry Development Plan: 1995-2012) which is a SACU programme.
“The main lesson is to contextualise the programme to fit one’s local needs and ambitions. To this end, we introduced a National Automotive Assembly and Production Policy for 2019 to 2021 and will ensure that a fully-fledged Namibian automotive masterplan is in place just in time when the APDP expires in December 2021,” Humavindu emphasised.
The recently announced South African Masterplan also supports regional collaboration and sourcing, thereby enhancing the opportunity for the development of regional and bilateral value chains and development within the regional automotive sector.
“Of crucial importance is to ensure that our policy development, which has lagged the MIDP introduction since 1995, is brought up to speed to ensure that peculiarities such as what happened to POAN are immediately circumvented and give investors the assurances they need. Bar one or two entities in the then Export Processing Zones, we hardly used the incentives under the SACU provisions as a country or embraced the programme to ensure the development of our own automotive industry. Now is the time,” Humavindu concluded.
During an interview with New Era last year, POAN spokesperson noted that the challenge is to implement an automotive quality culture, as it is relatively new for Namibia. “Assembling a vehicle is easy, continuously assembling vehicles reaching quality target needs robust processes that employees have to understand and apply. No deviation is accepted on quality. Fortunately, we found in Namibia employees with good technical background, highly committed with a wish to learn and to continuously improve their skills. This is very encouraging for the future and the development of the plant,” said the POAN spokesperson at the time.
PSA Groupe’s investment in the assembly plant is part of a long-term strategy to increase sales in Africa and the Middle East while the increased capacity of POAN is expected to serve regional markets with products in line with Opel and Peugeot’s customer expectations. – ebrandt@nepc.com.na