Assessment of existing incentive schemes and financing products for encroacher bush harvesting and value addition in Namibia - support to De-bushing Project
Namibia, through the Fourth National development Plan (NDP4) recognize invader bush harvesting as a national strategy that should be supported to amongst others, create direct and indirect jobs, increase land productivity (especially livestock carrying capacity) and through these; increase rural economic development and overall economic growth. Studies on invader bush in Namibia have established commercial viability of using the biomass through the creation of secondary value adding enterprises, which is in line with the promotion of local value chains of the Growth at Home Execution Strategy for Industrialization. While both economic and commercial importance of harvesting and adding value to the invader bush are widely acknowledged in the country, the industry is still relatively new and requires optimal support for growth. In underpinning the growth of the invader bush-based industry, the Support to De-bushing Project through the Ministry of Agriculture Water and Forestry (MAWF) has initiated the establishment of a Namibia Biomass Industry Group (N-BIG) and the De-bushing Advisory Service (DAS) to coordinate the scaling up of industry activities and provide expert advice respectively. The next step for advancing the growth of the industry is the provision of adequate, relevant financing products and incentive schemes for harvesting and value adding. This study is an assessment of existing incentives/grant schemes and financing products for de bushing activities in Namibia. The study used a supply and demand analysis to determine the adequacy of the current incentive/grant and financing product offerings and propose feasible adjustments that are more appropriate to support the establishment of a sustainable wood based biomass industry in Namibia. The study also used the Working for Water Programme (WFW) in South Africa as case to draw patterns and observations relevant to Namibia. The results found that, there are several relevant financing and incentive/grant products in the market for the de-bushing industry, however both suppliers and users of these products have also indicated the need for enhancement. The financial industry has shown readiness to improve their current offerings, specifically with regard to the pricing of the financial products and the collateral required to access them. Currently, commercial financing institutions charge a minimum average interest rates of prime which is 10.25 percent and a maximum of prime + 3 percent while development financing institutions charge an average minimum rate of 8.16 with the maximum of 10.25 percent. For security, financing institutions rely on traditional fixed assets which most industry operators either do not have or do not feel comfortable using, especially for activities that do not in themselves generate revenue, i.e. clearing and harvesting. There are two grant mechanisms in the industry which few industry operators are aware of. The study also revealed bottlenecks in the de bushing value chain which relate to policy and research and development for new products.