Namibia: Coherent Efforts Needed to Combat Poor Investment

In a recently launched private sector development survey (PSDS) 2020/2021, prospects for local investments in 2021 look rather bleak, and in fact below-average investment levels can be expected. This is despite economic analysts pinning domestic economic recovery on both local and foreign investment.

This latest survey carried out between 1 October to 15 November 2020 when the social and economic impact of restrictions imposed to contain the spread of Covid-19 became evident, included a total sample of 900 businesses across all sectors and the entire country.

Launching the survey last month, trade minister Lucia Iipumbu stated that about just over 60% of all businesses did not invest in 2020. Those who invested focused mainly on the replacement of equipment and research and development, rather than the expansion of their operations.

Looking at the impact of Covid-19, the survey confirmed that the worst hit sectors were the hospitality industry, followed by retail trade and business services while the least affected industries include mining and agricultural activities.

Iipumbu added that 81.1% of companies have experienced a decline in turnover of at least 50%. Also, 11.6% experienced a decline of up to 49% while more than a third of all companies (36.1%) had to reduce employment levels by between 50% and 100%.

Distance to markets was ranked the most important barrier followed by a lack of demand for products with access to and cost of finance ranked third. The quality-of-service delivery by public officials and the cost of utilities were ranked fourth and fifth respectively.

Furthermore, Iipumbu noted that large companies are more concerned about the demand for their products than about distance to access markets, while small businesses are apprehensive with the service delivery of public officials.

As part of the recommendations emanating from the survey, local economist Klaus Schade pointed to the need to establish a public-private sector dialogue platform, as ongoing economic and social challenges require coordinated approaches by both public and private sectors. Schade emphasises that Namibia needs to capacitate e-service providers and expand the reach of e-services.

"The ease of business registration and the ease of paying taxes has declined despite the establishment of digital platforms. This could suggest a lack of human resources to provide the necessary guidance and assistance to users of the platforms. Overall, e-services need to be rolled out more speedily to ease access and affordability of services as well as increase flexibility," advised Schade.

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