Staff Writer
The Construction Industries Federation says its members want to start work immediately after the lockdown period has ended on 4 May 2020 or there will be mass retrenchments and company bankruptcies in the sector.
“We appreciate the enormous effort taken to contain the spread of the virus and the support extended to individuals and businesses, where possible. Nonetheless, we are extremely worried that most of our businesses will not survive the lock-down period,” Bärbel Kirchner, CIF General Manager said.
“We are extremely worried about the impact on our businesses that we can foresee now as result of measures taken in response to Covid-19. We therefore feel that through commencing with work soonest and a carefully deliberately strategic approach we can stop the tide of further increasing unemployment.”
She said the current problems faced by the sector due to the lockdown have been compounded by the fact that since 2016 the construction sector has made huge losses, which has left companies in the sector extremely vulnerable, many of which are at the brink of collapse.
“During the last four years many businesses have closed as a result of reduced spending by government as well as the lack of domestic investment by the private sector and foreign investment. The industry has been suffering huge losses already over the last four years,” Kirchner said.
This comes as the sector contribution to GDP has dropped to 2.7 percent in 2019 from 7.2 percent four years ago.
“Since 2015 the average contraction of the construction sector was 12 percent, with a massive 34.4 percent contraction in 2016. This had led to extensive business closures in the industry,” she said.
Kirchner said irrespective of any financial support by Government that will be extended to the employees in the sector, the situation in the sector was dire.
“The CIF has recently conducted a research of its members, which suggests that without any income in the near future, many more businesses will close down. The CIF proposes that next to a simultaneous three-month’s payment holiday from financial service providers, that there will be strategic initiatives that will be determined now, to open the sector as soon as possible,” she said.
Kirchner urged government to reconsider and classify the sector as an essential service provider and allow the organisation’s members to return back to work.
“The construction sector not only contributes to building the much-needed emergency infrastructure and the roads and facilities needed by those that provide essential services, but is also can assist with alleviating the strain on Government’s financial resources. If businesses in our industry are engaged immediately, obviously with strict measures to prevent the spread of Covid-19, we can start to effectively contribute to Namibia’s economy in the interest of us all,” she said.
“The construction sector is vital sector and can also be a catalyst for growth in other sectors, as is relevant in so many global economies. If the construction sector were to be considered as an essential service and were to be opened up immediately it can essentially contribute to the creation of employment and contribute to the much-needed revenue by Government.”
Kirchner said the speeding up payment as previously announced by government when it announced its stimulus package, will help the cash flow position of some companies.
“Government had already committed themselves to be speeding up payment of outstanding invoices for work already delivered, and to facilitate the refund of VAT. We need a comprehensive approach. For example, those members that had responded to our survey said that they had about N$8.4 million outstanding in terms of VAT refunds; and N$192 million in terms of unpaid invoices. But through a careful strategically mustered approach by actively engaging and focusing on the Namibian construction sector, we can make big strides forward in view of saving not only the industry, but also securing the survival of parts of our economy,” he said.
“We simply cannot have a scenario that our industry will collapse and Namibians will no longer be able to build their own infrastructure in the future and massive resulting unemployment. This will increase our dependency on resources not available in Namibia, at a much bigger cost, to the detriment not only of ourselves but the detriment of future generations.”
