For Namibia to survive in the medium and long-term, every effort is required to create jobs. As in many other countries, Namibia’s fiscal space to continue supporting the private sector long after the lockdown period is extremely limited. After a four-year economic crisis, the coronavirus pandemic outbreak finds Namibia in an extremely vulnerable position.
Team Namibia, an organisation founded in 2003 to mobilise local consumers and to promote the production of quality local products, cautions that short of reserves, the country will find it very difficult to continue cushioning the impact and without any drastic measures. This, they warn, could easily spiral into abject poverty, more inequality with severe social consequences and unless drastic measures are taken immediately to secure the right regulatory and policy environment, the chances of growth and an upswing of the economy are very remote.
Bärbel Kirchner, account director of Team Namibia said: “It is now critical that we look at ways to create jobs. We applaud government’s efforts to cushion the impact of Covid-19 through fiscal and monetary measures, and also the support Namibia is given by its global partners.
“However, our economy has come to a standstill and has been impacted not only by our own measures to contain the virus but also due to the fact that we are an integral part of the global community. As this impact of this coronavirus is largely unpredictable, these measures were necessary to protect our Namibian people. However, we now need to look beyond and start preparing for the aftermath of lock-down and Covid-19”. Kirchner continued that for businesses to become economically active, it is vital that the behavioural changes, such as social distancing, sanitation of hands and, if possible, the wearing of masks continue to be strongly supported by the authorities and all employers. She urged that ongoing efforts need to continue to ensure the adequate production of sanitisers as well as government’s efforts to secure sufficient testing kits. However, Kirchner feels it is now critical that the next step of proactive measures include support for private sectors to not only maintain jobs but particularly to create new jobs.
Bärbel Kirchner added: “We know that necessity is the mother of invention and that in every threat there lies an opportunity. We now need the full-out support for our local businesses so that they can deliver more competitively and replace imported goods and services most efficiently. We need to strengthen our own capacities. Now is the best opportunity to achieve that, provided the right decisions are taken”.
“In the current environment, it is important that Namibians procure from local businesses. This includes the institutional buyers, especially government. Procurement legislation needs to be further supported with additional regulations and incentives in order to give local businesses a chance to compete against international powerhouses. This can either be done by considering preferences or set-asides for local businesses,” Kirchner stated. Any procurement legislation also needs to take cognisance of the impact of a weakening Namibian Dollar (and South African Rand) and the continuous exchange rate fluctuations, which makes effective and competitive bidding very difficult if not impossible, as the responsibility of covering the impact of exchange rate fluctuations lies with the bidding company. This is particularly relevant in the construction sector, manufacturing and in the information technology industry. Government has offered businesses extensive support to improve the cash flow situation. This can be further supported by a reduction of company tax as well as personal income tax for a period long enough to assess the impact of such fiscal measures that provide businesses with more liquidity during the economic recovery period.
Team Namibia is adamant that local production and manufacturing can also be supported through concerted efforts such as securing the right incentives for businesses. Efforts to repeal the manufacturing incentives through amendment of the income tax legislation must be put on hold immediately until Namibia can report strong economic recovery. Simultaneously, the continuous supply, availability and costs of utilities need to be reviewed. This will help that related businesses are not further restricted in an already extremely threatening environment.
As Namibia is still very much dependent on the import of raw material and other inputs, Kirchner advises that efforts should also focus on how the cost of imported inputs can be reduced to ensure that manufacturing, construction and other industries can increase their competitiveness.
Most importantly, she notes that government needs to focus on creating the environment that attracts investment, pointing out that with the global spread of Covid-19, the competition to attract foreign investment, has grown out of proportion with many economies wanting to attract the support from global investors.