23 May 2018

Namibia: Military Debt Forces Company to Retrench

State-owned military communications equipment company Sat-Com says it is retrenching 33 of its 70 employees, amid a revelation that the ministry of defence owes the company N$100 million.

According to the company's website, Sat-Com is part of the August 26 group of companies that focuses on a wide range of communications solutions from design, implementation to the delivery of turnkey solutions for both large enterprises and government departments.

August 26 is the business arm of the ministry of defence, and holds 75% of shares in Sat-Com.

Sat-Com's financial manager, Barbara Dekant, confirmed the intended retrenchments yesterday, but declined to comment further. The company's managing director, David Brown, had communicated to employees about voluntary retrenchment packages. He, however, denied that the retrenchments were a result of debt, stating that the government was unable to commit fully to the annual N$100 million and has decided to pay the money over a four-year period instead. "It is the sudden change in the contract that is a bit of a problem, but the government is trying its best to honour their part of the agreement. It is not that they do not want to pay but simply because they are unable to do so immediately," said Brown, admitting that they are experiencing cash flow problems. "But they [government] have been very supportive and we appreciate that."

Defence spokesperson major Petrus Shilumbu yesterday said he cannot say anything on the debt, and referred all questions to August 26.

The Namibian was unable to get comment from August 26 yesterday. However, a well-placed source at Sat-Com said the retrenchments are due to the fact that the ministry of defence, their biggest client, owes them more than N$100 million for high-tech radio devices which they annually supply to the military.

"We have a contract to supply the ministry of defence with radio equipment, and now they do not have money to honour the debt. Each year, we supply them with a certain number of radio sets. We had agreed that each year, according to our contract, we would supply them with a certain number of communications equipment.

"The ministry says they do not have the money to pay, and are only able to pay us a quarter of that amount. They have divided last year's contract debt into four years, meaning they will only pay N$25% of that amount this year," said the source.

The source said because of the government's decision not to pay, they had no option but to retrench one-third of their workforce. The company has about 70 employees. The Office of the Labour Commissioner has been informed of the retrenchments, and letters were sent out to employees notifying them of the issue.

"It is absolutely tragic because these people - most of them are the sole breadwinners of their families - and may not easily find jobs elsewhere. We educated most of these employees, trained them, and gave them bursaries," added the source.

The source said the company might contact the employees again if they secure international contracts. "However, we might not survive if things carry on like this," admitted the source.

Some employees expressed anger that the ministry had spent N$45 million to buy the Oropoko game farm, located about 60 kilometres north-west of Okahandja in the Otjozondjupa region, as a site for the NDF to train troops 'to live in harmony with wildlife', and 'perfecting shooting skills', yet they failed to honour their debts.

The purchase of the farm was exposed at a time when the NDF sent thousands of troops on extended leave in February because the army could not feed and house them at its bases.

A Sat-Com employee, who spoke to The Namibian yesterday, said he chose to take voluntary retrenchment.

Sat-Com last month issued letters to employees notifying them of the impending retrenchments, and offered them voluntary retrenchment packages. The Namibian understands that employees' last working day is tomorrow.

The company had a meeting with employees last month, where they were informed that they intended laying off some workers due to financial constraints, and that the business was struggling to break even.

An employee, who said she is still to get her retrenchment letter, revealed that there is "anxiety and fear among employees" as they do not know where their next meal would be coming from.

"I have not received my letter yet, and I am just waiting. The management has still not finalised the process, but there is some uncertainty over the future," she added.

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