The business environment, including Namibia and international trade
Domain 10: The business environment, including Namibia and international trade
This domain tests how external forces affect business, how Namibia trades, and the arguments for and against trade barriers and regional integration.
Core rules
- The business environment includes internal factors (staff, finance, culture) and external factors often summarised by PESTLE: political, economic, social, technological, legal and environmental.
- Globalisation increases trade, investment and competition. Businesses may export, import, license, franchise or set up foreign subsidiaries.
- Trade barriers: tariffs are taxes on imports; quotas limit quantities; embargoes ban trade; subsidies support domestic producers; standards regulate quality.
- Free trade can lower prices and widen choice but may harm infant industries and increase dependence.
- Namibia is a member of SACU (customs union), SADC (regional integration) and the AfCFTA (African Continental Free Trade Area). These arrangements affect tariffs and market access.
- Balance of trade compares exports and imports of goods; the balance of payments records all international transactions.
Worked example
A Namibian beef exporter sells to a SADC country. A tariff of 20% on beef raises the import price, making the exporter less competitive. A quota limits the quantity the exporter may send. Under a regional trade agreement, the tariff may be reduced or removed, improving market access. But the exporter must still meet health and packaging standards and manage exchange-rate risk.
Traps
Do not confuse a tariff with a quota: a tariff is a tax, a quota is a quantity limit. Do not say free trade has no costs. Do not treat SADC and SACU as the same organisation. Do not confuse balance of trade with balance of payments.