Business needs better understanding of regulatory environment

Understanding legal and regulatory measures is critical to enable adaptation to the existing business environment in Namibia, according to the Enabling Environment for Sustainable Enterprises (EESE) report that was launched in Windhoek last year. The survey, compiled by the Namibian Employers’ Federation (NEF) in conjunction with the International Labour Organisation (ILO), zoomed in on political, economic, social and environmental situation business of the enabling landscape in Namibia.A total of 683 respondents participated in the survey. Compared to EESE surveys conducted in other African countries, this is an extremely representative sample, according to the ILO. Of the participants, 404 were business owners or partners, 155 were managers and 124 employees. Included were 263 from the SME sector, 206 from large enterprises, 100 from the informal sector. The survey was conducted in Khomas, Erongo, Omusati, Oshana, Kavango East and Oshikoto. 600 of the interviews were conducted face to face. Sectors covered included agriculture, wholesale and retail, manufacturing, tourism, mining, financial services, health and business services.In general, the EESE survey noted that a large number of respondents were not aware of regulatory measures that might pertain to them.EESE survey respondents were asked where they were registered, and how they rated the business registration process. 41% of all respondents did not know about registration with the tax office, and another 40% were not aware of registering employees with the social security office though it is a mandatory statutory requirement that all employees be registered. According to the survey, 339 of the 400 formal enterprise respondents surveyed indicated that they were registered with the tax office. An informal sector registration card exists, but only 3 of the 100 informal enterprises had procured one, the survey states.When asked about the effect of the regulatory environment on small businesses in Namibia, 34% of large enterprises indicated that it was sometimes a hindrance. About 39% of SMEs surveyed said they did not know, as did 57% of the informal enterprises. Around 19% of SME employees found the regulatory environment to be relatively supportive, while 3% of SME employees found it to be very supportive. 33% of employees of large enterprises found the effect of the regulatory environment on large business in Namibia to be relatively supportive, with a further 19% finding it very supportive. According to the survey, 57% of informal enterprise respondents, 47% of employees, and 43% of SME respondents, when asked the same question about the effect of the regulatory environment on large businesses in Namibia, did not know or volunteer an answer. “In general, it was found that younger respondents, between the ages of 18 and 34 were more optimistic about the regulatory environment and its relative support, than respondents above the age of 35,” the survey states.Labour mattersThe EESE survey in Namibia found that there was relatively strong agreement among respondents that the formal and informal business community did not understand labour legislation, and that labour law was not always respected.Some 45% of respondents from large enterprises found that an inclusive process was partially followed when new policies or regulation were being proposed, amended or enacted. Again large proportions – 55% for informal enterprises, 48% of employees surveyed and 40% of respondents from SMEs, stated they did not know.The survey states that 35% of employees of large enterprises felt that workers in Namibia understand labour law partially as did 31% of SME employees.However, 44% of informal enterprise respondents and 43% of employees said they did not know if workers understood the labour law, as did 31% of SME employees. “20% of respondents overall felt that most small businesses were aware of, but ignored provisions of the labour law while 31% were of the opinion that most small businesses find it difficult to comply with the labour law,” the survey states.IncentivesLow market demand and the cost of inputs were perceived as the factors affecting businesses most negatively, while the limited access to affordable and relevant financial services was also seen as a major constraint to the running of a business, the survey found.When asked if government provided any services or incentives for small enterprises less than half of the respondents were aware of these. Less than half were aware or believe that government provides any services or incentives for small enterprises.When it came to rating the support system for individuals looking to establish a new business, between 20% and one third gave a negative rating which implies that these systems are not supportive enough, the survey states.“When asked about the greatest barriers to formalising a business in Namibia, not knowing how or what to do was marked most often, and by respondents from all types of businesses followed by there being too many procedures to register a business, and it being difficult to get a business license.”IndicesThe EESE survey provides for a Regulatory Quality Index, which measures the ability of a government to provide sound policies and regulations for the promotion of the private sector. “Namibia’s regulatory quality index has deteriorated since 2009, dropping from 0.10 to -0.08 in 2015, on a scale from -2.5 to 2.5 with higher values indicating a better performance,” the survey states.Namibia scores lower on this indicator than Botswana and South Africa, though Malawi has a lower value at -0.82 in 2015. South Africa has deteriorated slightly from 0.40 in 2009 to 0.30 in 2015, according to the survey.Namibia’s shortcomings in the legal framework for investment are echoed in the low Ease of Doing Business rankings, the survey states. The World Bank’s Ease of Doing Business Index ranks economies from 1 to 190, where the first place reflects a regulatory environment conducive to business operations. This index comprises averages for 10 different topics. “Namibia’s dropping in rank between 2011 and 2016 from 74 to 108 reflects a worsening of the business environment,” the EESE survey states. In the same period Botswana moved down from 52 to 71, while South Africa moved from 36 to 74. Malawi marginally improved, going from 141 in 2011 to 133 in 2016.The Starting a Business Index records the officially required procedures to start and operate an enterprise. Economies are ranked from 1 to 190, with first place indicating more favourable conditions for starting a business. “Namibia’s ranking has declined over time, sinking from 125th place in 2012 to 164th place in 2016. Botswana went from 90th place in 2012 to 143rd in 2016, while Malawi went from rank 139 to 161, and South Africa from rank 44 to 120.” The number of days required to start a business in Namibia stayed the same over the last five years, at 66 though the ranking went from 125 in 2012 to 164 in 2016. “In terms of the number of days required to start a business Namibia performs the worst of the comparison countries, as Botswana was at 48 in 2016, Malawi at 38 and South Africa at 46,” the survey states.

Business needs better understanding of regulatory environment

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