Finance minister Iipumbu Shiimi this weekend blamed the outbreak of the Covid-19 pandemic for the worsening fate of the airline industry. Commenting on social media Shiimi asked: “How many airlines went into bankruptcy since the start of Covid-19? I am counting over 30 and many more went into restructuring.”
Shiimi added that in a history context, countries that prosper are those that spend money on things that matter, such as housing, education, agriculture, and health and that these countries avoid debt traps.
“Namibians who care about the future of our children, should realise that the country is at a crossroad, either we make difficult choices, with short-term pains for a better tomorrow or easy choices that lead to bankruptcy, more unemployment, no housing, poverty, and crime,” said the finance minister.
He continued that in government’s attempts to create a better future for Namibia, it is important to protect the interest of the majority of Namibians, not just the interest of the few.
Shiimi also warned that it is not correct that liquidation is going to cost the government over N$2 billion. “Liquidation costs are not paid by shareholders. Those who are not sure about this please confirm this with experts.”
Also commenting on this matter, Salomo Hei, the Head of Research at research firm High Economic Intelligence, said the national airline serves different purposes, with breaking even and profits perhaps a few of many considerations.
“To arrive at liquidation, there should have been a consideration for quite a lot of these factors. To what extent was restructuring or reorganisation looked at?” asked Hei. He also questioned whether there was an assessment made around the business model and those implementing the model.
“To what extent did agreements deviate from the model and was there a collapse in control mechanisms? Or maybe what is or was the model?” he questioned.
According to Hei, pre-Covid-19, the country used to land about 50 000 people at the Hosea Kutako International Airport (HKIA) per month, which significantly contributed to Namibia Wildlife Resorts (NWR) and other tourism entities.
Meanwhile, stock brokerage Simonis Storm (SS) last week said that it is tragic to have arrived at this point where people have to lose their jobs. SS blamed government that had years of not making tough decisions, poor management and not acting on the considered options. SS concluded that government exacerbated the unsustainable situation over the years, which inevitably made liquidation the only option.
– mndjavera@nepc.com.na