Nearly 5 000 businesses close doors

Jo-Maré Duddy – A total of 4 825 businesses have deregistered with the Business and Intellectual Property Authority (Bipa) since 2016, when the country’s current recessionary cycle started.

Nearly 77% or 3 698 of these were closed corporations (CCs). Companies which ceased operations in the past five years total 1 127, data released by Bipa shows.

Namibia’s economy last showed significant growth in 2015 when it expanded by 4.3% on an annual basis. Average growth from 2016 to 2019 was -0.38%, with the largest contraction of 1.6% recorded in 2019. The Bank of Namibia (BoN) forecast growth of -7.3% for 2020 in its latest outlook, the biggest contraction in the country’s history.

Most of the deregistrations at Bipa were recorded in 2017 and 2018, in total 2 305 or nearly 48% of the entire figure for the period under review.

Bipa’s deregistration figure of 727 in the year that Namibia was hit by the Covid-19 pandemic and ongoing economic woes echoes the trend reported by the ministry of labour, industrial relations and employment creation. According to the ministry, nearly 1 000 employers had to close down or cut back in 2020, resulting in the retrenchment of 12 201 workers.

Analysts agree that around 40% of Namibia’s workforce currently is unemployed following years of negative or poor economic growth, exacerbated by the impact of the pandemic.

INVESTMENT

Bipa data shows that the registration of foreign companies in Namibia is on a downward slope. Only four foreign companies registered with the authority last year, down from 11 in 2019, 15 in 2018 and 12 in 2017.

Only 42 foreign companies registered with Bipa from 2017 to 2020 compared to 5 997 Namibian companies.

Gross fixed capital formation (GFCF) or net investment, including foreign direct investment (FDI), has been plummeting since 2014 and 2015 when it peaked at more than N$45 billion per year. Data released by the Namibia Statistics Agency (NSA) shows GFCF in 2019 amounted to about N$30.5 billion – the lowest since 2012.

Cirrus Securities, in their Economic Outlook 2021, described the trend observed in capital investment and net FDI as “particularly worrying”. FDI is on particular importance, the analysts said, as there is “limited freely-available funding from domestic sources, given the constrained domestic environment, where external finances would play an important role in catalysing growth in Namibia as well as provide a large inflow of hard currency”.

For Namibia to get its fair of the “quantum of money pumped into the global financial system”, however, the country needs “a far more hospitable business environment, certainty on policy and property rights, and a guarantee that capital (whether foreign or domestic) is not only welcome within Namibia, but also to leave again”.

“Until we can see these changes, Namibia will remain her own worst enemy on the road to sustained long-term development,” Cirrus said.

NEW REGISTRATIONS

Bipa data shows 12 013 business entities registered with the authority last year, the lowest in the period for 2017 to 2020.

Included in the figure are registrations for Section 21 or non-profitable companies (154) and defensive names (2 332).

Registering a defensive name can be the initial step towards registering a business. It protects the name for a period up to four years. The registration of defensive names is often regarded an indication of business confidence.

The number of defensive names registered at Bipa last year was the lowest in the period under review, down nearly 46% from 2017.