'Many won't survive pandemic'

More than a quarter of businesses surveyed between May and July had to retrench employees, while a further 8% planned to follow suit within the next two months.

“It is clear that many Namibian businesses will either not survive the current pandemic or will survive it with great difficulty,” researchers Christie Keulder and Lizl Stoman of Survey Warehouse say in a study on the impact of Covid-19 on local business. The study, which was commissioned by the Namibian Employers Federation (NEF) and released yesterday, is based on feedback of 517 businesses countrywide, mostly small enterprises.

About 81% of participants said the financial impact of Covid-19 on their business was high. Nearly one in five had to stop operating due to Covid-19.

About 32% of businesses in the sample felt their businesses would survive more than four months under the prevailing conditions. Ten percent believed their businesses would not survive another month and 43% estimated between one and three months.

“This means that business closures are likely to be spread out over time, and businesses will continue to struggle and remain vulnerable for the next few months leading to the end of the year. This means that, most likely, more wages will be cut, and more staff will be retrenched over the same period as businesses continue to find ways to ensure survival,” the study says.



Jobs

Most of the businesses which had to retrench workers – 74% - were restaurants. Other sectors severely affected were hotels and tourism (45%), food and beverage (43%), transportation (41%) and construction (31%).

“Of these, those businesses which deal with food, beverages and accommodation are mainly employing women. Thus, with the large numbers of retrenchments in these sectors, one can assume that many retrenchments will affect women directly,” the study says.

It continues: “Furthermore, in some tourist establishments such as lodges and guest farms it is common practice to employ both the husband and wife in different parts of the operations.

“Retrenchments could therefore mean both wage earners are at risk of losing their jobs simultaneously, meaning the household will stop receiving any income from employment almost instantly.”

About 47% of respondents said the had or planned to reduce their wage bill. “The wage reductions are broad-based, meaning that its impact is widespread across the entire company workforce; 75% of businesses in the sample that have implemented wage cuts, reported that it applied to more than 40% of their workforce,” according to the study.





More than one in five businesses (27%) cut wages by more than 50%.



Funding

Only 43% of businesses in the sample indicated that they have access to sufficient funding to stay operational.

“This means that 57% of businesses are either in danger of having to close down, or very likely to experience difficulty raising sufficient funds to keep their businesses operational,” the study states.

It adds: “The problem is made worse by the fact that government's support to businesses in three of the hardest hit sectors is firstly, limited and secondly, held up by inefficiencies.”

Access to funding is a problem for most companies whether they were fully operational or not. However, for those closed down at the time of the interview, the problem is much worse, according to the study.

The survey found that 75% of businesses who were shut down, have insufficient access to funding.

SURVIVAL

About 51% of respondents said it would take more than three months for them to restore full operations. This implies that they foresee the current crisis lasting until at least the end of this year, the researchers say.

More than 10% of businesses are considering closing down because they will not be able to return to full operations, they add.

“It is clear that many more businesses are likely to close down in the next three or more months that they anticipate it will take to recover. Most of those will run out of cash before the crisis is over, unless they manage to gain access to funding to help resolve their current cash flow problems,” the study says.