Martin Endjala
Small and medium enterprises (SMEs) are facing survival challenges as government capital projects and funds are redirected to the state-owned August 26 Construction.
Peter Amadhila, vice president of the Namibia Local Business Association, noted that, as a result, many SMEs in the construction sector are struggling.
“Stop asking about projects, as there are hardly any or no more projects, especially construction, going into the SMEs countrywide. All government construction projects are allocated directly to August 26, uncontested,” he said.
Amadhila said roads are also allocated to the government’s parastatal company, Roads Construction Company (RCC).
“The native businessmen and women are currently in hell when it comes to business survival.
Amadhila warned that this situation could lead to increased unemployment and severe poverty within the country.
He said the government is no longer feeding the private sector to create employment and beneficial opportunities for the people, but rather it is feeding itself.
Veikko Haimbodi, the former chairperson of the Namibia Chamber of Commerce Industry (NCCI) in the northern regions, also confirmed that businesses are dying.
“Businesses in the private sector are really falling apart. This is due to very few capital projects happening, most of which are carried out by August 26,” he argued.
He said the sector is left to face the ugly, harsh realities of political gimmicks at work.
Haimbodi argues that only those with political ties seem to be getting a piece of the cake, while those who don’t are often left wanting.
“The government should distribute capital projects fairly, or at least ensure that some projects are given to the private sector to stay afloat,” he said.
The Construction Industry Federation of Namibia’s chief executive officer, Barbel Kirchner, said they are concerned about the budget allocation for construction renovations and improvements.
She said the budget at N$3.2 billion, is very low this year. Kirchner added that it is still better than last year’s N$2.2 billion allocation.
According to her, the budget for public works was over N$6 billion before the recession,
“We hope that the budget will continue to increase over the next few years. We certainly don’t want to see the allocation below N$3 billion ever again which it has been for two years since the peak,” she said.
She said that businesses, regardless of their size, have experienced adverse effects.
Kirchner argued that foreign contractors’ involvement in water infrastructure projects funded by the African Development Bank, as well as the road upgrade between Usakos and Karibib funded by the Kreditanstalt für Wiederaufbau, has added more pressure on the locals.
She said there is very limited civil work for contractors.
She believes the new developments in the mining industry have a positive impact on demand for local civil construction services.
“They need to see a clear and positive intent by the government that majority Namibian-owned contractors, of any size, will be actively engaged, irrespective of where the funding comes from,” she said.
She also wants to see the industry regulated by forming a national construction council.
Independent banking researcher and economist Josef Sheehama said the situation in which there are limited government capital projects often presents difficulties for the private sector.
“With limited government projects, companies have fewer opportunities to bid on contracts or engage in large-scale infrastructure development,” he explained.
Sheehama said this restricts SMEs revenue streams and growth potential.
He said a lack of government projects could weaken investor confidence.
“Investors commonly regard government-backed businesses as safer investments. When there are limited government projects, private companies may struggle to raise funds. Private businesses that rely significantly on government contracts may be vulnerable if they are not renewed or new ones are not granted,” he explained.
He said government-funded projects usually stimulate innovation and progress.
According to Sheehama, reduced government investment can lead to layoffs in private companies, especially those that are associated with public projects.
In contrast, he said Namibia’s economy is improving, yet issues remain, such as in the areas of construction and agriculture, among others.
“To sustain growth and combat inequality, it remains critical. With a positive economic outlook, I believe the government can sustainably manage the country’s debt, despite the increase in government domestic debt,” he said.
He believes that effective implementation of local content on all mineral resources will improve macroeconomics.
According to the NSA’s latest statistics, there was an increase in economic activities of N$1.7 billion in the first quarter of 2024, bringing total GDP to N$38.9 billion, up from N$37.2 billion in the same period of 2023.
