By: Nghiinomenwa Erastus
The latest Private Sector Development Report 2021/22 has indicated that micro-enterprises continue to be hardest hit by the economic conditions in terms of turnover.
As a result, this has affected the level of employment, the report found.
The survey captures business and private sector perceptions on important tools for detecting business hurdles, investment bottlenecks and getting insight into the efficacy of previous and present policies.
The report revealed that 67.4 per cent of micro firms experienced a decline in their turnover in 2021 compared to 15.0 per cent of large corporations.
Furthermore, 35.2 per cent of micro-businesses had to cope with a drop in turnover by at least 50 per cent compared to the large companies.
Only 27.5 per cent of micro-enterprises achieved growth in turnover compared to 65.0 per cent of large businesses.
Moreover, the micro-enterprises that experienced turnover growth of only 2.9 per cent saw a rise in turnover by 50 per cent or more compared to 20 per cent of large entities.
The survey indicated that half of the micro-businesses had to reduce their workforce (48.3 per cent), and 30.4 per cent of micro-businesses were reduced by at least 50 per cent.
5.3 per cent of large companies shed labour, but none of them by 25 per cent or more.
The report indicated that about 11.7 per cent of micro-enterprises added jobs and 1.7 per cent by 50 per cent or more, while 52.6 per cent of large companies created jobs and 21.1 per cent by at least 50 per cent.
THE CHALLENGES
According to the report, the feedback from the business is that there has been a shift in the ranking of the main challenges business people face in Namibia.
The lack of demand for goods and services has replaced the distance to markets on the first spot as the main challenge faced by entrepreneurs.
Access to and cost of finance and utilities followed at number two and three from place three and five respectively in 2020.
Concerns regarding the public procurement process have increased and moved the factor to fourth-ranking, followed by the quality of service delivery by public servants (place five), the report revealed.
The ease of business registration with Bipa has recovered from a deterioration in 2020 (+0.3) to +0.7 in 2021, indicating relative improvement in the process.
The time and complexity of registering a business also received a more favourable rating of plus +0.8 compared to the +0.6 allocated in 2020.
The cost of registration is not of concern to respondents, with a rating of +1.3 in 2021 compared to +0.9 in 2020.
A rating of +1 implies that the cost of registration is hardly an obstacle for businesses.
Two out of three business people (66.2 per cent) consider the public procurement process as not supportive for local businesses, and less than one out of five (18.6 per cent) view it as supportive or very supportive.
The assessment is almost on par with the rating in 2020 (67.8 per cent and 17.6 per cent, respectively).
The score of -0.8 remains unchanged from 2020 and is well in the negative territory.
The ease of participation in the public tender process has improved somewhat from -1.0 (2020) to -0.7 in 2021.
The trust in the procurement process received a similar negative rating of minus 0.8, like in 2020.
ACCESS TO SERVICED LAND
The survey has also revealed that more companies needed serviced land (35.6 per cent) and or un-serviced land (10.1 per cent) in 2021 compared to 24.5 per cent and 2.6 per cent, respectively, in 2020.
However, 95.5 per cent of respondents who need serviced land rated the process of obtaining land as difficult or very difficult, with a clear trend towards very difficult (64.4 per cent).
The rating of -1.6 for the ease of obtaining serviced land suggests it remains a mission impossible and reflects a deterioration from 2020 (minus 1.4).
Micro-enterprises drove the demand for land for entrepreneurial purposes. 43.7 per cent required serviced land, compared to 16.0 per cent of large corporations.
The report indicated that about one out of five small and medium-sized businesses were seeking access to land.
In addition, 13.4 per cent of micro firms were in need of unserviced land, more than three times the share of large operations (4 per cent) and almost double the share of small businesses (7.3 per cent).
The survey shows that hardly any medium-sized companies showed interest in un-serviced land (1.7 per cent).
The cost of land (51.0 per cent) tops the list of factors mentioned by the participants as reasons for the challenge of obtaining land.
Bureaucratic procedures (39.5 per cent) take the second spot.
The responses in 2021 reflect the responses of 2020, with the cost of land increasing its relevance slightly from 48.9 per cent, while the relevance of bureaucratic procedures dropped marginally from 41.4 per cent.
About half of micro and small enterprises views the cost factor as decisive compared to two-thirds of medium-sized firms.
Slightly more small enterprises (43.8 per cent) regard bureaucratic procedures as the second most relevant factor than micro-businesses (38.9 per cent) or medium companies (35.7 per cent).
Only large corporations view bureaucratic procedures (44.4 per cent) as the main obstacle, followed by the cost of land (33.3 per cent).
Based on the years in operations, all respondents identified costs as the leading factor followed by the procedures, but to varying degrees, the report revealed.
The survey was done with funding from the Deutsche Gesellschaft für Internationale Zusammenarbeit through the project Promotion of Business Advisory and Economic Transformation Services (ProBATS). Email: erastus@thevillager.com.na
