MOST of the businesses in Namibia will run out of cash before the end of the year unless they manage to gain access to funding to help resolve cash flow problems brought on by measures implemented to curb the spread of the COVID-19 pandemic.
The Namibia Employers Federation (NEF) initiated a study that was undertaken with the help and assistance of Survey Warehouse and the International Labour Organization (ILO).
The study published by the NEF found that more than a tenth of businesses in the survey sample are considering closing down possibly because they will not be able to return to full operation.
“Businesses will continue to struggle and remain vulnerable for the next few months leading to the end of the year. This means that, most likely, more wages will be cut, and more staff will be retrenched over the same period as businesses continue to find ways to ensure survival. It is clear that many more businesses are likely to close down in the next three or more months that they anticipate it will take to recover,” the report states.
The study found that Namibia’s economy was in a precarious position prior to the advent of the pandemic.
“The impact of the COVID-19 pandemic on Namibian businesses is severe. Some sectors are worse off than others and businesses whose activities include tourism, accommodation, travel, conservation, trophy hunting, restaurants, leisure, events, as well as aviation and construction are harder hit than others. Many businesses involved in the tourism value chain, for example, have had no meaningful income since the closure of Namibia’s international borders back in March. This has had a detrimental effect on many local communities in the form of direct job losses, loss of income to conservancies, and less financial support for community conservation. It has also wiped out opportunities for most freelance work such as tour guiding and driving,” the report adds.
The NEF report states that businesses across all sectors have had to employ drastic measures to ensure their survival.
To this effect, they implemented a multitude of measures ranging from reducing working hours and shifts to asking staff to take annual leave.
Despite this, many started to close down temporarily, retrench large components of their workforce, or cut wages in an attempt to outlive the pandemic.
These measures have had a significant knock-on effect on Namibian households.
According to the report, Namibian businesses have not received much assistance from Government to help off-set at least some of the impact of the pandemic thus far.
Despite a stimulus programme of just more than N$8 billion announced in April, relief efforts are limited by Government’s financial and institutional ability to implement such programmes.
The Employer Wage Subsidy Programme is a prime example: More than 100 days after its announcement, it still has not been implemented.
This study showed that time is a very important variable in assessing the impact of the pandemic.
The report states that most formal Namibian companies are small companies that have insufficient access to capital or financing to see out the pandemic.
Most business need cash to survive and to date, the only help they have received is from suppliers, landlords and to a lesser extent from commercial banks. With the pandemic still in its early stages in most of the country, it is therefore likely that many more businesses will close down before the end of the pandemic and as a result unemployment will rise.
The report states that the next two to three months will be crucial for Namibian businesses, as many would require at least three months to recover to pre-pandemic levels.
The Business Survey consisted of interviews with 517 enterprises in 13 regions.
It included businesses of different sizes and active in multiple sectors including agriculture, mining, construction, restaurants, retail, hotels, and tourism operations.