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Distance to markets a major challenge for Namibian businesses

2022-06-24  Edgar Brandt

Distance to markets a major challenge for Namibian businesses

The distance to markets has been replaced by demand for goods and services as one of the main challenges Namibian businesses face in the current economic climate. Other obstacles to doing business in the country consist of access to and cost of finance, as well as cost of utilities. 

This is according to the Private Sector Development Survey (PSDS) undertaken by the trade ministry and the German development agency, the Gesellschaft für Internationale Zusammenarbeit (GIZ). The two entities collaborated in 2019 to revive the Namibian Business and Investment Climate Survey under the Promotion of Business Advisory and Economic Transformation Services. 

Other challenges that emerged from the latest survey include concerns about the public procurement process, followed by the quality of service delivery by public servants as well as access to material, which emerged as a significant challenge for local manufacturers.

This PSDS 2021/22 is the third consecutive survey during a time of economic challenges posed by Covid-19-related restrictions and travel bans, global supply-side disruptions and economic uncertainties at large. 

“The PSDS, therefore, provides insight into business sentiments and concerns. The PSDS 2021/22 was conducted between the beginning of November and the middle of December 2021. Close to 400 businesses from a sample of 1 002 companies responded either to the online survey or telephonic interviews. The questionnaire followed to a large extent the previous two surveys to ensure comparability of results,” a summary of the survey stated. 

The survey had 24 questions, which required a rating between minus two (very difficult, very high, etc.) and plus two (very good, not a problem at all, etc.). Officials calculated weighted averages for the questions which were then compared to previous years, as well as within categories of businesses.  

One of the general observations from the survey is that micro-enterprises continue to be hardest-hit by the economic conditions in terms of turnover and employment. Also, the hospitality (accommodation and restaurants) as well as the construction sectors have felt the brunt of the prevailing economic conditions. 

The latest survey further confirmed a strong correlation between the intention to invest in business expansion, and the intention to create additional employment. 

While survey respondents pointed to a slight improvement in the general economic conditions in 2021, the rating of expected economic conditions for 2022 remains slightly in negative territory, although it is an improvement compared to the prevailing conditions in 2021. 

“On a scale of minus 2 (very poor) to plus 2 (very good), businesspeople rated the economic conditions in 2021 on average at minus 0.9, which represents an improvement compared to 2020 (minus 1.3) and 2019 (minus 1.0),” the survey summary stated. 

Moreover, the share of companies which did not invest at all declined marginally from 60.1% in 2020 to 58.1% in 2021, while the intention to invest in 2022 has slightly weakened compared to the intention to invest in 2021, as expressed in the 2020 survey from minus 0.8 (2021) to minus 0.9 (2022). Some 74% of respondents who intent to invest above average also expect to create jobs. None of the respondents planning to invest planned to reduce their workforce.

The PSDS furthermore showed that Covid-19-related restrictions and regulations affected 64.3% of all respondents in 2021 very negatively and another 23.5% negatively, which signals a marginal improvement compared to 2020 (70.1% and 20.3%, respectively). 

Meanwhile, the impact on business turnover has improved in 2021, compared to 2020. 27% of respondents indicated a drop in turnover of at least 50% (2020: 81.1%), and an additional 30.8% by up to 49% (2020: 11.6%). In contrast, 32.5% of businesses recorded a growth in turnover, compared to 3.4% in 2020. Just over 23% of companies reduced employment levels by at least 50% (2020: 36.1%), but 15.5% created additional jobs, up from 2.1% in 2020.

Furthermore, border procedures were rated less favourable than in 2020. The border procedures on the Namibian side of the border were rated lower in 2021 than in 2020. While the rating of the custom procedures on the foreign side of the border were in the past rated more favourably than on the Namibian side, this gap has now narrowed. 

The survey also indicated that the ease of registration with the Business and Intellectual Property Authority has recovered from a deterioration in 2020, indicating a relatively easy process. 

2022-06-24  Edgar Brandt

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