Business closures and retrenchments looming
Businesses hard hit
09 June 2020 | Business
Local business owner; “Looking at the situation now, people will die of hunger and not of the coronavirus.”
President Hage Geingob extended the existing Phase 1 lockdown to the whole of the Erongo region for 14 days.
Walvis Bay has already been on lockdown for the past seven days and the new extension comes with far-reaching and devastating effects for local businesses operating in the harbour town and the region.
Andreas Maischatz indicated before the announcement by the president that the Casa Mia Hotel in Walvis Bay would have to retrench its 32 employees and close if the restrictions were not lifted.
“We are earning N$2000 a day with which we can barely survive. Our reserves are depleted; the bank can't help us with a loan, so we have to take the 'punch'. Even if Walvis Bay was lifted to phase 3, it would take months before we can recover. I worry about my staff being left without a source of income."
Various business owners agree with Maiscahtz, saying that they would have to dismiss their workers or simply close their businesses.
"It was truly unfair to restrict Walvis Bay while the rest of the country continues to do business as usual," was the overall sentiment.
Maischatz took to Facebook to ask for information about businesses who might need to close down due to Covid-19 restrictions before the lockdown was extended.
“The response was overwhelming, with many business owners in the same boat as I am.”
Unable to pay
An established brick making factory at the coast is also at the point of either closing down or not paying employee salaries for the next two weeks.
“We already retrenched people and ran out of reserves before Cobid-19 struck. We had to survive for two months with no income while our expenses kept no. With no state support we were on our knees after the first lockdown. For now, we will be using employees on a “need to use only” basis. Unfortunately this is on a no work, no pay principle. If the government and unions do not agree and force us to pay all salaries, we will not be able to survive the second round. The consequences for us are bad, not only for us as business owners, but for our employees as well,” said a representative of the company."
Another business owner, Sharmine Livingstone, said that 90% of her business is based on tourism.
“This includes our tented camps, desert dinners and weddings we cater for. Since the borders closed, we have been without business and without an income. As for our local business, which consists of weddings and corporate events, these were stopped by government. We are currently carrying on with Pot-to-Plate which is a division of Desert Catering. We’re only doing this because we are mostly supplying elderly people with meals. Pot-to-Plate barely breaks even.”
Livingstone said this was a very depressing time for businesses.
“It takes a lot of energy and effort just to get up in the morning and put one foot in front of the other. We have been in business for 25 years and now all our prospects are bleak.”
Schools not spared
According to a local private school principal, her school may need to close by the end of this month.
“In addition, the safari business my husband owns is barely surviving. We have had no income since March when the lockdown started and borders were closed. Our target market is tourists. We had two tours since March. Nobody wants to spend their money on luxuries at the moment because they have to pay rent, buy food and care for their families.”
She explained that the private school only caters for a small number of children.
“Many of the parents are small business owners. I know of one parent whose income was immediately cut when they stopped the open markets and street vendors from operating. As a parent your first priority is to feed your children. The majority of parents could not pay school fees. When the first lockdown was announced, we carried on, because we have a syllabus to follow. We’ve been issuing work once a week, and we have WhatsApp groups with parents.”
Her biggest concern is that many of the children will have to repeat their grades.
“Many parents do not have the capabilities to home school their children, nor the resources as some could not afford to buy textbooks earlier this year.”
She added that she was not able to pay the rent for the school premises for three months now.
“I had to cut salaries of the staff members by 20% - 25%. I do not know what will happen at the end of this month. I might have to let some of the teachers go since many of the parents also gave notice that they are going to keep their kids at home till the end of the year. This is totally understandable due to the virus, but where does that leave us? How are we going to cover our water, electricity and rental expenses? The teachers depend on me for their salary and the majority are the sole breadwinners in their households.”
In light of what’s happening, Namibia will find itself in the clutches of extreme poverty, the principal says.
“People won’t die of corona, but of hunger. This is the reality. There are many small businesses that closed down in March already. If I don’t make a good business decision now, I will find myself in so much debt. I am already three months behind on the rent, which is more than N$50 000. How do you catch up with that when there is absolutely no income whatsoever? The worst case scenario is losing the school building.”
Poena Olivier, the owner of Magic Discounters in Walvis Bay, said that he may need to retrench 30 of his employees.
“We won’t close but we might need to retrench. Magic Discounters strives to produce 60% of its goods in Namibia. With the lockdown, sales are down and no one is allowed to work, so it has now become cheaper to just import. Why would I still want to have factories manufacturing goods in Walvis Bay when it is impossible to do business?"
Olivier also questioned the rationale behind the authorities saying businesses need to use their reserves.
“What reserves? With an economy that has been shrinking for the past three years, all business reserves have already been exhausted.”
A petition titled “stop the lockdown in the Erongo region” is now making the rounds on social media. By lunch time on Tuesday it contained 1726 signatures.
The petition calls for the lockdown to be stopped, borders to be kept closed and for jobs and the economy to be saved.
A document is also circulating on social media calling on interested parties to join a legal challenge of lockdown in the region.
Lawyer Thersius Biermann from Swakopmund will be handling the case on a pro bono basis.
“The government clearly has no rational plan as to their Covid-19 response apart from lockdown. It is thus safe to assume that this lockdown could continue for as long as government wishes, whether rational, reasonable or just,” the document states.
The petition and the envisioned legal challenge seeks to force government to relax the lockdown measures from stage 1 to stage 3.
According to information contained in the legal challenge document, the objective of the lockdown is to contain the virus locally which can be justified.
“The harm done by the stage 1 lockdown however is simply disproportionate to that objective. A level 3 lockdown for Erongo could be attainable in a court action as the government’s main objective to contain the virus in Erongo is still attained, but people are enabled to earn a livelihood – simply starting to co-exist therewith. This will also enable the government to monitor the spread (if any) but also allow citizens to “live”.”