Business ponders mass exodus

Private enterprises in the country say that the government's tendencies towards increased socialism and the economic empowerment bill are causing uncertainty.

24 May 2019 | Business

A recent survey by the Economic Policy Research Association (EPRA) of close to 600 businesses concerned about the government's policy direction shows that a staggering 58% of local businesses have contemplated leaving Namibia over the past three years.

The businesses cite economic decline and Swapo's increased move towards socialism, factors which they say place the sustainability of their businesses at risk.

The businesses have lost substantial trust in the government and business climate since the start of discussions on the New Equitable Economic Empowerment Bill (NEEEB) and the promulgation of the Namibia Investment Promotion Act (IPA).

As many as 32% said they had since then considered registering their businesses in a foreign country instead.

Sixty-seven percent said they had not thought about registering their companies elsewhere, and 1.7% said they had already registered the entire company, or part of it, in a foreign country.

During the public consultation process on NEEEB, many companies started contemplating moving their business to other countries, notably Mauritius for its flat 15% tax rates, ease of doing business, and low corruption index.

“These are things people had not even thought about before the NEEEB was first distributed,” says EPRA's Eben de Klerk.

Asked about their investments, only 18.3% of the businesses said they invested some or all of their profits outside the country.



Governance makes for risky business

The respondents ranked the factors that expose their businesses' sustainability to extreme risk as economic decline (91%), government bureaucracy and poor service delivery (80%), government's drive towards socialism (75%), seemingly unstoppable government corruption (74%), and government policy (73%). Fifty percent regarded crime as an extreme risk.

An overwhelming number of businesses (97.2%) said they did not believe the government showed sufficient political will to fight corruption. Almost 73% said they did not think the Anti-Corruption Commission (ACC) was effective in fighting corruption, and nearly 80% said they though corruption was on the rise.

“It seems as if the fight against corruption is lost,” said De Klerk.

“If those who are in the highest and best positions to commit corruption are the same people to appoint those who must fight corruption, the fight is lost even before it started. For instance, if no investigations or any action followed when the director of the ACC [Paulus Noa] himself was accused of corruption.”

Namibian companies were also concerned about the Chinese bonanza: about 66% felt Namibia never benefits when the government awards capital projects and tenders to Chinese firms. About 25.6% said Namibia benefits “rarely”. None (0%) felt that Namibia always benefits when tenders go to the Chinese.

Not a single company was satisfied with the government's spending priorities: 97% say they were dissatisfied or very dissatisfied.

Despite President Hage Geingob's claims of an inclusive 'Namibian House', 57.22% of the businesses felt that tribalism is on the increase; 40.6% though tribalism has remained the same as before.

According to De Klerk, tribalism trumps concerns over racism, saying there is a strong indication that appointments and tenders are being awarded along tribal lines, while influencing the policy environment as well.

“The story of Namibia can never be unity if tribalism continues to trump the day,” De Klerk said.

None of the businesses were content with Namibia's disparate income distribution. In fact, 66.1% said they were dissatisfied and very dissatisfied with the Gini coefficient of 0.57.



Employee crime the lesser evil

Despite high levels of crime and fraud committed by employees, governance factors by far trump concerns about sustainability at the responding companies.

The majority (53.3%) of the businesses said they had suffered damages over the past year due to crime, fraud and corruption committed by their employees.

About 70% felt they cannot rely on the criminal justice system to bring errant employees to book; 53.9% felt the civil justice system (in cases of interdicts, contractual and damages claims) is “somewhat” or “very” inefficient.



No voice

Businesses feel they have no say or influence over government policy-making.

A whopping 93% feel they have no influence, and 82% say they are not members of the Namibia Chamber of Commerce and Industry (NCCI).

The businesses seemingly have no trust in the NCCI, with 54% stating that they do not know whether the NCCI can adequately and effectively represent the interests of the Namibian business community.

Thirty-eight percent said the NCCI can definitely not be trusted to do so. Only 7% think the NCCI can.

This is important considering that the NCCI is the only private-sector platform the government engages with under the Harambee Prosperity Plan (HPP).



CATHERINE SASMAN

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