Struggling economy takes its toll as established businesses close their doors
WINDHOEK – A sluggish and weak domestic economy in 2018 that is struggling to recover from an ongoing recession, following negative growth of 0.9 percent recorded in 2017, is taking its toll on both business and households. The struggle remains very real even for established businesses in the capital, many of which have been forced to close their doors while a few have found light at the end of a very dark tunnel by opting for a change of venue.
Some of the businesses suffering from the woes of the ongoing recession include well-established companies such as school uniform supplier, Karseboom, high-class restaurant, Gathemann, men’s outfitters Otto Mühr, as well as electrical services company, Kriess Electric. While a number of regulars to Café Schneider in the Levinson Arcade also think they have closed their doors, they have in fact only moved to new premises as a result of escalating and unaffordable rental prices.
“There is no more business for us. We have tried every trick in the book to keep our doors open but we cannot survive anymore. Now we are in the process of closing our doors and we are selling everything we have,” said Charl-Heinz Steinfurth, owner of Kriess Electrical. Responding to questions from New Era, Steinfurth admitted that he thought he could pull through the tough times but soon realised that it was an exercise in futility. Steinfurth has been running Kriess Electrical since 1982 but said a spate of nine burglaries since October last year only added to his anguish.
“We used to get a lot of work from government but at the moment we do not get anything. I think this government is stealing everything in this country. The fat cats are stealing this country dry and all we have to do is continue paying tax,” charged a clearly irate Steinfurth.
Also commenting on the ailing domestic economy, owner of Café Schneider, Joachim Hassel, yesterday said decentralisation efforts by many companies play a major role in the performance of the central business district (CBD). Previously situated in the bustling Levinson Arcade in the heart of Windhoek’s CBD for about 60 years, Café Schneider found a new home last month in the recently renovated Carl List Mall.
According to Hassel, the decision by major businesses such as banks, law firms and insurance companies to move into the suburbs where they are closer to the people has a huge impact on business in the CBD.
“Once FNB moved out, our business declined immediately by 50 percent. Rental charges also play a big role. When our rent was increased to N$80 000 per month in June last year I realised that the old premises were no longer viable,” Hassel explained.
He continued that due to the decrease in foot traffic in the CBD his business has degraded by at least 15 percent per annum for the last three years. This he attributes to the lack of maintenance by landlords in the CBD, saying that a business does not object to paying rent provided they can see that the property is being maintained and upgraded.
“We used to have twice as much staff as we do now. The only person I retrenched was our manager as I could no longer afford to pay his salary, but in terms of staff, we have not replaced any of the staff that have left us,” Hassel clarified, saying that he has not been able to hire any new staff for the last four years.
According to local economists, the weak domestic economic performance in 2018 was mainly due to declining economic activity in sectors such as agriculture and wholesale and retail trade. Other sectors, including mining, transport and communication as well as manufacturing improved during the same period and the domestic economy is projected to eventually record positive growth in 2019.
In a recent Economic Outlook, the Bank of Namibia said real GDP was expected to contract by 0.2 percent in 2018, from a deeper contraction of 0.9 percent in 2017, and thereafter to recover to a positive growth rate of 1.5 percent in 2019.
Risks to domestic growth include a weak recovery in the country’s trading partners and slow recovery in international commodity prices, particularly for uranium. The BoN outlook also cautioned that should the economic recovery in neighbouring Angola fail to materialise, the impact would continue to be felt in sectors such as wholesale and retail trade, education, real estate and business services, thereby worsening growth prospects in these sectors.
According to an International Monetary Fund’s World Economic Outlook growth in global output is projected to remain unchanged at 3.7 percent in 2019.
Risks to the short-term global growth outlook have become more pronounced, with economic growth turning out lower than the main forecast, due to elevated policy uncertainty. Risks to the global outlook in the medium-term include rising trade barriers and a reversal of capital flows to emerging market economies, increased geopolitical risk and pronounced policy uncertainty.
2019-02-21 10:03:06 1 months ago