Once bitten, twice shy
Despite the downturn, Namibian entrepreneurs can still pick themselves up, given they do not repeat the same mistakes made in the past.
NDAMA NAKASHOLE - Namibian entrepreneurs are generally known for liking luxury. In Namibia, the moment an entrepreneur makes some cash, they end up buying a new phone or new car.
Because of this culture, local entrepreneurs end up finding themselves in problems when the economic season changes.
Economist Rowland Brown made these comments in his lecture at a workshop on business, credit and labour market regulation and their impact on economic development, organised by the Chevauchee Foundation in Windhoek recently.
Brown, whose talk was titled ‘Challenges Faced by Namibian Entrepreneurs’, said it is wise for entrepreneurs to keep their fixed costs low at all times.
“Don’t keep employees you don’t need,” he said. Also, getting rid of unnecessary things such as cars and furniture will help the business to survive when the economic climate turns cold.
Feasting
Brown said while funding for entrepreneurs is becoming less of an issue in many parts of the world, it is still a big challenge in Namibia.
However, when Namibian entrepreneurs get access to finance, they borrow too much.
“When entrepreneurs come to me and tell me that they have obtained a loan, I always tell them to keep in mind that the banker might be friendly but the bank is not your friend,” he said.
Brown also reminded entrepreneurs that banks are not interested in their business cash flow; their only interest is the loan.
Clientele
Brown said that building a client culture is crucial. He believes Namibians are lagging behind in this aspect of entrepreneurship. For example, there is a vast difference between the service offered at a restaurant or lodge in Namibia and one in South Africa.
“That is something we need to change,” he urged.
He also emphasised the importance of honesty: “If you are honest, your mistakes will be honest.”
Tenderpreneurship
Brown touched on the issue of government contracts, saying that tenderpreneurship is costly to the economy.
Tenderpreneurship refers to the culture of entrepreneurs whose core business is to bid for tenders, especially public ones, by acting as middlemen and inflating the tenders, making huge profits in the process.
“You as a middleman making money from nothing … Who is paying for that? Because definitely government is not paying for that,” he said.
‘Never give up’
Brown said that Namibians’ attitude towards failure is that one gets one chance only to make a success. On the contrary, failure is part of the learning process and entrepreneurs should rather “fail forward”.
Brown urged entrepreneurs not to give up on their ideas.
“Naysayers shouldn’t be listened to … but they also shouldn’t be ignored entirely,” he said.
Investment
Brown emphasised that there is an extremely high level of unemployment, which is rising. Large salary increases are unlikely because of the economic downturn, while household debt is also very high.
“We will not see growth driven by households at the current point in time,” he said.
That basically leaves the country with investment as the only option to increase employment, household income and government revenue.
“The ‘government should’ mentality is a large part of the problems that the country faces at this point in time,” Brown said.
“For the government to do something, they have to get resources from somewhere.”
This means higher taxes.
“For every additional dollar you make, you keep less and less of it,” he said, adding that this mentality will lead to a situation where there are fewer people who are working, fewer people doing business and the government will ask for more.
Advice
Brown said Namibia needs to do away with too much regulation, as it takes time to comply with regulations. He added that Namibia can handle many of the problems it faces.
He said while many jobs are created by entrepreneurs, entrepreneurship is not for everyone. He said being an entrepreneur is not easy and it is also very stressful.
If one does it right, one definitely reaps the rewards, “but it definitely doesn’t come without sacrifices”.
Stagnation
The head of the Namibia Chamber of Commerce and Industry’s policy department, Leonard Kamwi, said at the same event that Namibia needs to learn from success stories where economic recovery was achieved in few years.
He said Namibia is a small economy and that makes its cash-flow problems bigger.
“If you have a N$60 billion budget in 12 months, that means you spend N$5 billion a month. In a small economy like ours, you don’t get N$5 billion coming in in a month,” he said, adding that even the African Development Bank’s N$3 billion loan disbursement to Namibia came in over three months.
He said a finance minister in a country like Namibia does not sleep, “because any single mistake you make means you might not be able to pay salaries”.
Because of this culture, local entrepreneurs end up finding themselves in problems when the economic season changes.
Economist Rowland Brown made these comments in his lecture at a workshop on business, credit and labour market regulation and their impact on economic development, organised by the Chevauchee Foundation in Windhoek recently.
Brown, whose talk was titled ‘Challenges Faced by Namibian Entrepreneurs’, said it is wise for entrepreneurs to keep their fixed costs low at all times.
“Don’t keep employees you don’t need,” he said. Also, getting rid of unnecessary things such as cars and furniture will help the business to survive when the economic climate turns cold.
Feasting
Brown said while funding for entrepreneurs is becoming less of an issue in many parts of the world, it is still a big challenge in Namibia.
However, when Namibian entrepreneurs get access to finance, they borrow too much.
“When entrepreneurs come to me and tell me that they have obtained a loan, I always tell them to keep in mind that the banker might be friendly but the bank is not your friend,” he said.
Brown also reminded entrepreneurs that banks are not interested in their business cash flow; their only interest is the loan.
Clientele
Brown said that building a client culture is crucial. He believes Namibians are lagging behind in this aspect of entrepreneurship. For example, there is a vast difference between the service offered at a restaurant or lodge in Namibia and one in South Africa.
“That is something we need to change,” he urged.
He also emphasised the importance of honesty: “If you are honest, your mistakes will be honest.”
Tenderpreneurship
Brown touched on the issue of government contracts, saying that tenderpreneurship is costly to the economy.
Tenderpreneurship refers to the culture of entrepreneurs whose core business is to bid for tenders, especially public ones, by acting as middlemen and inflating the tenders, making huge profits in the process.
“You as a middleman making money from nothing … Who is paying for that? Because definitely government is not paying for that,” he said.
‘Never give up’
Brown said that Namibians’ attitude towards failure is that one gets one chance only to make a success. On the contrary, failure is part of the learning process and entrepreneurs should rather “fail forward”.
Brown urged entrepreneurs not to give up on their ideas.
“Naysayers shouldn’t be listened to … but they also shouldn’t be ignored entirely,” he said.
Investment
Brown emphasised that there is an extremely high level of unemployment, which is rising. Large salary increases are unlikely because of the economic downturn, while household debt is also very high.
“We will not see growth driven by households at the current point in time,” he said.
That basically leaves the country with investment as the only option to increase employment, household income and government revenue.
“The ‘government should’ mentality is a large part of the problems that the country faces at this point in time,” Brown said.
“For the government to do something, they have to get resources from somewhere.”
This means higher taxes.
“For every additional dollar you make, you keep less and less of it,” he said, adding that this mentality will lead to a situation where there are fewer people who are working, fewer people doing business and the government will ask for more.
Advice
Brown said Namibia needs to do away with too much regulation, as it takes time to comply with regulations. He added that Namibia can handle many of the problems it faces.
He said while many jobs are created by entrepreneurs, entrepreneurship is not for everyone. He said being an entrepreneur is not easy and it is also very stressful.
If one does it right, one definitely reaps the rewards, “but it definitely doesn’t come without sacrifices”.
Stagnation
The head of the Namibia Chamber of Commerce and Industry’s policy department, Leonard Kamwi, said at the same event that Namibia needs to learn from success stories where economic recovery was achieved in few years.
He said Namibia is a small economy and that makes its cash-flow problems bigger.
“If you have a N$60 billion budget in 12 months, that means you spend N$5 billion a month. In a small economy like ours, you don’t get N$5 billion coming in in a month,” he said, adding that even the African Development Bank’s N$3 billion loan disbursement to Namibia came in over three months.
He said a finance minister in a country like Namibia does not sleep, “because any single mistake you make means you might not be able to pay salaries”.
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