Protect Local Cement: Not Fanciful White Elephants
Policymakers should try to understand why the giant German cement producer, Schwenk Zement International GmbH & Co KG, is desperate to exit Namibia barely 10 years after investing in a state-of-the-art factory.
It was reported this week that Schwenk, a significant building materials business across most of Europe, is once again trying to get rid of its Ohorongo Cement production operation.
Schwenk set up the Otavi-based operation in 2010 with minority shareholding from development banks, including the Development Bank of Namibia. Within less than 10 years, Schwenk was already looking to sell the Namibian business, but the move was blocked by the competition commission in 2020.
Controversy now surrounds the second exit attempt. Namibian politicians are accusing Ohorongo’s owners of acting in bad faith by not offering the business to natives of the country instead of West China Limited, which is apparently under one roof with Whale Rock Cement, owners of Cheetah Cement at Otjiwarongo.
Namibian leaders should be more concerned about why an investor which has been conducting its business successfully in other countries, notably in south and central Asia and Europe, is desperate to run away.
Deputy prime minister Natangwe Ithete will probably nonchalantly tell them to “pack and go” given his attitude that Namibians should own their businesses.
We hope Ithete and people with a similar mindset will press pause and consider a few points: What attracted Schwenk to set up operations in Namibia – its first venture outside of central, eastern and northern Europe?
Why have they decided to pack up so soon after having initially promised to stay put as they have done in Europe?
One hint might be the company’s complaint that Namibia’s economy is too small to accommodate more than one cement company, made worse by the significant collapse of the construction industry.
It is also worth recalling that Ohorongo Cement was unhappy that Namibia allowed the importing of bulk cement from China by a darling of Swapo politicians, Jack Huang’s Jack’s Trading CC, for the Namibian Port Authority’s expansion of the Walvis Bay harbour.
Who would not be unhappy, considering that Huang was minting it with a huge state-construction project without so much as having a pack warehouse while Ohorongo had invested more than N$2.5 billion in a major business operation.
The bottomline is that Namibia’s ruling politicians have cared little about supporting investors and the broader public. They are happy to line their pockets with side deals and so-called black empowerment schemes for themselves, relatives and cronies.
Instead of spending billions of dollars on pet projects like Air Namibia that are primarily enjoyed by the rich or bailing out a butchery, the Meat Corporation of Namibia, a sector that can operate without state funding.
Imagine if the government subsidised or provided incentives for cement and local producers of building material.
After all, cement is always in great need for infrastructure development, let alone to help fulfil promises of mass housing, hospitals and schools.
Political leaders need to put taxpayer funds where their mouths are.
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