The 11-member Business Rescue Task Force (BRTF), appointed by President Hage Geingob in July this year, on Friday submitted its interim report to the head of state.
Its proposals included urgent intervention for financing businesses in distress as well possible tax relief and speedier Value Added Tax (VAT) refunds. The task force highlighted these as some of its preliminary business rescue initiatives while noting that its overall mandate is to investigate longer-term systemic support through the amendment of relevant legislation. The task force is expected to submit its final report by March 2022.
Presenting the interim report, Thinus Prinsloo, BRTF chairperson, said the current legislative environment provides for judicial management or liquidation as the only relief for creditors. As a result, he said, there is a need for changes to business funding legislation to ensure businesses are rescued rather than closed down.
“The recommendations and programmes of the Harambee Prosperity Plan are essential to get the economy going. Hand-in-hand with the right business rescue actions and legislation in place to support those, other initiatives will also go a long way in helping with the revival of the economy,” said Prinsloo.
The BRTF specifically recommends that principles be included in the Companies Act, Close Corporations Act, Public Enterprises Governance Act, and the Insolvency Act to help with intervention of financing businesses in distress.
“Financing and funding are the key aspects that will make or break whatever comes through in the business rescue legislation. Businesses are in distress because they lack cash, and in order to save a business, you need bridge financing,” Prinsloo explained.
Through the preliminary funding recommendation, the task force also urged government to explore the establishment of a Business Rescue Fund. Prinsloo pointed out that the four categories to be considered are debt funding, equity finance, bonds and grants or donations.
Furthermore, the task force chairperson said engagements with several stakeholders pointed to serious challenges between banks and their customers in dealing with distressed businesses. Prinsloo stated that further introspection is needed to identify the root causes of these challenges.
Other considerations brought forward were for the finance ministry and Namibia Revenue Agency (NamRA) to consider business tax relief measure and to implement speedier Value Added Tax (VAT) refunds to make sure business stand a chance to survive the negative impacts of the pandemic. Other proposals included for the Social Security Commission to relaunch its stimulus package for employers and employees, for local authorities and the Electricity Control Board (ECB) to address bylaws, red tape administration burdens and the overall cost of utilities, particularly SMEs. “The Namibia Investment and Promotion Board should expedite its ease of doing business analysis and the implementation of service delivery enhancement. And also, the good standing certificates should be relaxed when justified,” Prinsloo suggested.
The chairman assured Geingob that the task force undertook thorough research and conducted the necessary consultations and discussions with representatives of businesses, banks, insolvency practitioners, government as well as other relevant bodies to identify opportunities for specific policy interventions.
Commenting on the report, Prime Minister Saara Kuugongelwa-Amadhila said it is important all stakeholders are brought on board to make sure there is a shared understanding of all proposals. According to the PM, many corporates are suffering and there is an urgent need for action especially toward those corporates that show consistent commitment and eagerness to assist with economic recovery and growth.
“Stakeholder engagement is important especially when there are funding issues and we will have to mobilise the range of options as suggested. It would possibly also require different resources in order to actualise the funding arrangements suggested,” noted Kuugongelwa-Amadhila.
President Geingob thanked the task force for their work and said he remained confident the force will deliver according to its mandate. He also mentioned that the country was severely affected by devastating drought and Covid-19 which makes the business environment even more challenging.