NEEEB dents business confidence
Local businesses do not believe empowerment legislation will result in broad-based empowerment.
15 May 2019 | Business
These are the damning results of a recent survey conducted by the independent Economic Policy Research Association (EPRA) that tries to capture local businesses' concerns about the government's latest populist policies.
Eben de Klerk of EPRA said the association's objective is to advocate for pragmatic, sustainable, pro-growth and investment economic policy in Namibia, and by extension advocate for pragmatic job creation and equality improvement.
EPRA approached close to 600 Namibian-owned companies primarily in the tertiary sector - from one-person enterprises to larger ones with over 500 employees - to gauge their confidence in the business climate after corrosive discussions around proposed legislation, which is still in the works while it is being metamorphosed in name and content.
It was first dubbed as the New Equitable Economic Empowerment Draft Framework (NEEEF), which was based on voluntary, incentivised reform.
Later it became the New Equitable Economic Empowerment Bill (NEEEB), a proposed law aimed at a mandatory reduction of white ownership and management in all Namibian businesses.
One of the most contentious proposed pillars of NEEEB causing discomfort among businesses was a mandatory 25% equity to be alienated to formally disadvantaged people.
This proposed pillar at some point was to be removed, reconsidered, or restructured, but with the NEEEB still to be finalised, nothing is certain yet.
It appears that the proposed Economic Empowerment Advisory Council will remain in the new draft. This council will have unlimited powers to reduce white ownership and management in all Namibian businesses.
What is certain is that many primarily white-owned businesses started to wonder what their future is.
“There is definitely a negative feeling around the future of the country. In my opinion this stems from weak and divisive government policies that hurt the economy. These policies also send out the message that as a business you will be hurt; we will not grow the economy, and we do not care,” said EPRA's Eben de Klerk.
De Klerk said local businesses have lost substantial confidence in the government.
“That is what businesspeople say on the street. If you speak to government, it is like it exists on a different planet,” he said.
Answers to questions relating to economic indicators in the survey look as bleak as the general mood in the country's business sector.
A whopping 69% of businesses said their business revenue over the last two years had decreased somewhat or materially. Only 9.44% said their revenue remained the same and a meagre 6.11% said their revenue had increased materially.
Most businesses (32.2%) said they had made no investments in their businesses over the last two financial years, while 11.6% said they had materially increased investments in their businesses. About 19.44% said they had materially reduced investment in their business.
There were heavy job losses over the last financial year: 39.44% of the respondents said they had to reduce their labour force. Only 12.22% have increased their labour force.
About 31% of businesses expect to reduce their labour force this year, while fewer than 10% think they will be able to accommodate more workers.
“I am afraid this is not a message that gets to the government,” De Klerk commented.
Most notably, 81% of businesses believe that the NEEEB will result in substantial economic decline, while 75% believe that NEEEB will not result in broad-based economic empowerment.