7 June 2012

Namibia: Low Demand, High Costs Stifle Enterprise

STRUGGLING to find a market for their goods and services is the biggest hurdle local businesses have to overcome, a new survey has shown.

The 2012 Namibian Business and Investment Climate Survey (namBiC), launched yesterday, concluded that the low demand for products and services, the shortage of skilled labour and the cost of utilities like water and electricity are the three major factors hampering formal and informal business in the country.

NamBiC reached this conclusion after surveying 446 local businesses of all sizes countrywide and across the spectrum last November and December. Low demand especially hurts micro enterprises and informal businesses, the namBiC report stated.

These businesses are mainly hair salons, car washers, shops and repair services, as well as accommodation and restaurants, which include shebeens.

There is a high concentration of businesses and the fact that the services offered are very similar in nature, fuelling competition, result in low demand, the report said. It said by-laws and municipal regulations which restrict business activities to certain areas limit opportunities.

The namBiC report said business owners of micro and informal enterprises should be advised on how to diversify their products and services and distinguish it from those of competitors.

Launching the survey yesterday, Prime Minister Nahas Angula for the active seeking of markets and improved innovation of products to ensure competitiveness.

"It is not enough to cry for markets and higher demand for your products if such products are not able to compete with products from other sources," Angula said. The cost of utilities, particularly electricity, moved up from sixth place in 2011 to third this year on business owners' list of worries.

Access to finance has dropped from rank one in previous years to rank fourth overall in 2012.

The namBiC finding is supported by those of the latest FinScope Consumer Survey and the Global Competitiveness Report.

Another challenge local businesses face is long distances to markets. This used to be a stumbling block mainly for small and micro enterprises, but has now become a concern to medium and large companies as well, the namBiC report said.

Medium and large firms also see stringent labour market regulations as hampering business. The report said "Government intends to implement additional regulations soon, such as the Employment Service Act that will require employers to submit vacancies to the Employment Service Commission first before openly advertising the post".

This initiative will most likely result in labour market regulations being seen as an increasingly inhibiting factor for doing business, it said.

The namBiC survey found that crime and theft have become less of a headache for business, except for micro and informal enterprises. Crime and theft dropped from the fourth rank overall in the 2011 survey to rank seventh now.

Copyright © 2012 The Namibian. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.