Namibia: Businesses Struggle With Cash Flow and Low Demand

28 October 2020

Most businesses in Namibia are facing two main challenges during this uncertain time of Covid-19. According to a recent survey about 75% of local businesses, the biggest challenge is the cash flow problem while 71% bemoaned lower than normal demand.

The figures emanate from the research conducted by the Namibia Employers Federation (NEF) on the impact of the Covid-19 pandemic on business in the country.

"Others have mainly been affected by disruptions in their supply chain. At the time of the survey, Namibia's infection rate was very low; hence, Coronavirus was not a major challenge," reads the report.

Furthermore, at the time of the study, more than 100 days after the first day of the national lockdown, only one-in-three (33%) businesses sampled received any assistance of some sort.

According to the report, this means most businesses have not received any assistance in dealing with the economic impact of the pandemic for more than 100 days since the first day of the first lockdown back in March.

Further measures on immediate responses aimed at protecting companies' cash flow include cancelling lease and service contracts (38%), asking landlords for rent holidays, applying for a commercial bank loan (13%) and looking for supply chain alternatives (13%). Close to one-in-three business owners (32%) used personal savings to bail out the business and a further 7% used a personal loan. Only 4% stockpiled raw materials and inputs.

The report further stated that only 44% of businesses in the sample were fully operational, working on-site at the time of the interview, whilst another 4% were fully operational but working remotely. Some 34% were partially operational whilst 19% were not operating at all.

Businesses in the hotel and tourism industry were greatly affected with 47% of businesses partially operating and 31% not operating at all. Restaurants were in a similar position with 37% closed and 42% operating only partially, and food and beverage companies reported 17% closures and 23% operating with partial capacity.

"Most of these businesses were deemed non-essential services and were forced to close their doors by strict social distancing regulations during the first stage of lockdown. They were allowed to reopen but with severe restrictions during stages two and three of the state of emergency," the report explained.

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