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Iono - Behind the Bulletins

Namibia’s Construction Industries Federation Calls for Help

The Construction Industries Federation of Namibia (CIF) remains very concerned about the current state of the industry. Research as well as anecdotal evidence suggests that enterprises in the construction sector are in a crisis. Entrepreneurs are in the process of closing businesses or are forced to scale down operations drastically, often to the extent of dormancy. With close to zero turnover, costs are cut to an absolute minimum. This leads to loss of overall production in the industry with a huge related loss of government tax revenue and employment in the sector. The CIF pleas that everything possible is done to ensure that the construction sector revives.  
Proposed measures include:
An increase of the Namibian government’s capital budget focusing on productive infrastructure as well as the swift payment of outstanding debts to contractors; 
the provision of regular and comprehensive information relating to all government projects, which is much needed by the sector to take strategic business decisions; 
a commitment from the Namibian government that the local construction sector will be supported and that the focus will be on maintaining the Namibian construction capacity; 
that a Namibian national construction council will be established without delay so that the industry will be much better regulated;
and improved monitoring and inspection of public building and construction work to ensure adherence to all legislation and that contractual obligations following the award of public tenders are being met.
The CIF also urges that the Namibian government policy and legislation takes cognisance of the importance to attract much-needed investment and to facilitate the ease of doing business in Namibia.
The CIF regularly engages the construction industry. In April 2017, the CIF again had asked its members to give feedback on the implications of late payment and reduction of government funds available for building and construction projects. Results of the survey show that 63% of responding businesses either have closed down, are dormant or have “scaled down drastically”. Between 1 September 2016 and 31 March 2017, a minimum of 30% of the workforce was retrenched. 
This is likely to get worse, unless Government finds a way to intervene.  According to the survey, if by end of June 2017 no new tenders are being awarded – 67.39% of the responding businesses will have closed down, are dormant or have “scaled down drastically”, and close to 40% of all employees in the sector will have lost their jobs.
Retrenchments are being experienced across the entire supply chain. Not only the building and civil contractors and sub-contractors such as electricians, plumbers, flooring specialists, roofers, painters, air-condition technicians are affected. Architects, engineers, quantity surveyors as well as suppliers of building materials also needed to scale down operations and make large scale retrenchments. Similarly, manufacturers and suppliers of building material are also experiencing a serious down turn. 
Whilst acknowledging that payments have been forthcoming, the CIF feels frustrated that despite having undertaken several measures to press upon authorities the severity of the situation – i.e. closure of business and retrenchments -  that it appears that there is limited scope to find a solution. 
Bärbel Kirchner, consulting general manager of the CIF says: “Since September, the CIF has made great efforts to communicate with and engage executives on all levels of government as well as state-owned enterprises. Due to the severity of the situation, and out of desperation we have also reached out to every Member of Parliament in order to emphasise the consequences of capital budgets cuts and delayed payments, and the fact that we need to see more local construction companies to benefit from government construction projects during this difficult time. 
“We have also highlighted the need legislation to better regulate our industry through the establishment of a construction council”.
The greater part of the industry is dependent on government contracts. The scale of growth in the construction sector over the recent years was largely due to demand created by the government for much needed infrastructure development and the creation of employment. Many new entrepreneurs had entered the sector and the extent of the demand meant that businesses did not see the need to diversify their client base, markets or their services, or indeed to adjust their operations. Therefore, they are extremely vulnerable to the extreme and sudden changes in government expenditure.
It is generally perceived that mostly the small contractors are being affected. However, it is important to remember that construction is a capitalintensive industry, and that larger contractors have invested heavily in plant and machinery. These investments are made in anticipation of a continued demand for construction services. Therefore, a sudden and drastic cut of government capital expenditure could lead to the demise and closure of even the largest contractors. Some say that due to cyclical nature of economies that at some point a downturn should have been expected by the construction sector. However, the rapid drop is said to be only partially of cyclical nature but more so due the fact that the sector had been overstimulated in the past.  The industry therefore feels justified in requesting that the adjustments in public capital expenditure will be less radical. 
Ms Bärbel Kirchner, consulting general manager of the CIF says: “It is generally understood that a consolidation of the national budget and prioritisation of public expenditure was necessary for the long-term gains of our economy. However, our appeal is that the budget considered for capital projects would be revisited and that related reductions will be minimised.
“We know that our government needed to take measures in the long-term interest of our country and we are very grateful that our Minister of Finance has taken the bold approach to secure much greater control over public expenditure. 
“We also know that the cake has become much smaller and that our government and especially our Minister of Finance is being pulled into all directions as everyone wants a share of the now much smaller cake. Our industry, which we believe can trigger a multiplier effect and stimulate also other sectors of our economy, ideally should receive a slice big enough to make a meaningful contribution to Namibia’s economy and to secure employment.”
It is important that immediate measures are taken to ensure that the construction sector will survive. However, irrespective of budget allocations, the current uncertainty is the untenable. Without critical information available, business owners are not able to take informed decisions.  
To provide for services delivered in previous financial years, which however have not been paid as of yet by the government, an allocation of 1.8 billion Namibian Dollar (N$) was proposed during the budget speech delivered by Namibia’s Minister of Finance, Mr Calle Schlettwein, in March 2017. 
However, businesses operating in the construction sector need to know when the additional funds of N$1.8 billion for services delivered to the public sector, will become available and what the proposed share will be for the construction sector. There is also great uncertainty about which projects, that already had been awarded, will proceed and which projects will be cancelled. The sector needs to be provided with a list of all projects that will be advertised and for which tenders will be requested in 2017/2018.  It is vital that this information becomes available so that businesses in the sector can strategise accordingly.  
About the award of government contracts, the CIF argues that socio-economic considerations need to be taken into account. Building and constructions projects can stimulate the local economy provided that the money remains in circulation within the country. This can be secured by giving preference to contractors that adhere to Namibian legislation.
An obvious requirement would be that the contractor regularly and judiciously pay taxes to the government. In addition, that the contractor buys predominantly local building materials where available, or duly pays customs duty on any imported material. 
Registered Namibian businesses, should also show proof that they have the necessary plant and equipment, that they focus on maintaining and building local capacity in the construction sector and that they employ Namibians and adhere to the minimum wages and minimum employment conditions determined for the Namibian building and construction sector.  
Bἃrbel Kirchner, consulting general manager of the CIF says: “We can only plea that everyone involved in procurement - not only the buyers and public officials, but also the consultants in our industry – has a judicious approach and remembers to also take into consideration the interests of our economy and its people. 
“When the awards of government building and construction contracts are done with great circumspection, capital budget expenditure can benefit the Namibian economy at large, it can benefit Namibian businesses and create employment for Namibians and the money remains in circulation in Namibia”. 
The new Public Procurement Act (of 31 December 2015), which has been implemented on 1 April 2017, has the potential of effectively steering socio-economic development to the advantage of the Namibian economy and its people. The Public Procurement Act can ensure that procurement will become more uniform across all levels of government and state-owned-enterprises and has the potential of curtailing any desires popping up to benefit personal interests.
The now implemented procurement legislations gives scope to the Minister of Finance to make changes to public procurement practices across all government authorities, not only to achieve greater transparency and efficiencies in public procurement but also to effectively steer socio-economic development through effective procurement. For example, a prudent approach can ensure that Namibia maintains and further develops capacities of her local construction sector. 
This can be achieved when procurement thresholds which determine the preference given to small-to-medium-sized Namibian enterprises, larger Namibian companies and which determine when foreign companies in joint venture with Namibian companies can compete in the local market, will be adjusted. Namibian companies have the capacity to handle all sizes of building and infrastructure developments, including projects up to 500 million Namibia Dollar and more.
In addition to the Namibian government’s new procurement legislation, it is equally important that the construction sector is being regulated. The CIF has for many years, since to 2006, pleaded that a national council for the construction sector would be established.  However, despite having raised the importance of greater regulation in the construction sector with several authorities, not much progress in re-tabling a bill in Namibia’s National Assembly seems to have been made. 
The industry has experienced a tremendous growth over the last ten years. A less regulated environment meant that there is generally much greater scope for many players to operate – including tenderpreneurs; foreign companies, some of which without due consideration of local interests; as well as contractors taking on projects without sufficient experience, qualification or financial capacity. The effect of such an unregulated environment is that legitimate local contractors with adequate capacity are increasingly pushed aside; and that ongoing local capacity building, continued employment and the provision of decent work, increasingly is undermined. 
However, the Right Honourable Prime Minister Saara-Kuugongelwa-Amadhila recently had announced in Namibia’s parliament that a bill for a Namibian national construction council will be tabled soon, which is an indication of the Namibian government’s commitment to secure a better regulated environment for the construction industry. 
Bärbel Kirchner, consulting general manager of the CIF says: “Despite having a waited for a long time, we remain hopeful that a Namibian Construction Council will soon become a reality. All our neighbours in the SADC region have such a council to regulate their construction industry. The industry is now also involved in the negotiations in the trade in services in the SADC region. Without any Namibian legislation for the construction sector we would increase our sector’s vulnerability if we were to negotiate to increasingly liberalise the trade in construction services. 
“One thing is clear, much greater regulation of the industry in the interest of maintenance and further sustainable development of Namibian construction capacity, is vital. We need to have the required legislation to establish a council for the industry as soon as possible.
“As a whole, for the economy at large, we need to ensure that conditions and policies and legislation are right to attract investment. That would probably have the biggest impact.
“We need to introduce some major changes for the lasting positive impact for the construction industry. It is not only important that Namibian contractors are able to survive under current circumstances. Instead, once we have steered through current difficult times, we would like to see our industry thrive in the interest of Namibia, our population at large.” 

Parents need to tighten belts after budget cuts

Here is a rather good media release issued by Bank Windhoek detailing what parents can expect following the announcement that government is to cut available subsidies to schools:
With government budgetary cuts now affecting secondary schools, parents will need to tighten their belts even further to ensure their children receive a good education.
The Ministry of Education recently announced in their budget vote that the N$500 subsidy for secondary schools will be reduced to N$250 per learner in the 2017/18 financial year.
The Education Ministry further indicated that at primary school level, where the ministry previously allocated N$350 per learner, only N$250 will be spent per learner through the new budget.
“These cuts will inevitably be passed on to parents, who will have to increase this specific budgetary item in their household budget,” said Riaan van Rooyen, Head of Corporate Communications, Strategy and Sustainability at Bank Windhoek.
“Parents will have to look at cutting expenses at home as well as in their daily lives to accommodate the subsidy cuts. To identify these cuts, it is important to focus on necessities. Think about that lunch and coffee you buy at work. Could you not perhaps save by bringing your coffee and lunch to work? Also preparing lunch or snacks for children going to school instead of giving them money to buy from their tuck-shop.”
“Another solution to save for your child’s future and ensure they get the best education would be to open a savings account especially for that purpose.” Van Rooyen notes that Bank Windhoek offers various savings products especially tailored to create a savings culture.
Van Rooyen said further: “Not sure how much you can afford to save? Start small – maybe just putting your change each week into a jar. If that works, try setting aside a bit more on a regular basis. Be realistic – it’s better to commit to a smaller sum you’re confident you can manage than a bigger amount that you give up on.”
If there is one thing we can expect, it is the unexpected, so better to start saving now, than wait for the unexpected to happen,” Van Rooyen concluded.

Black men were boys during apartheid says Tjiriange

More in Nampa's series in the lead up to Independence, here is journalist Anna Salkeus' article on Ngarikutuke Tjiriange's reflections on pre-Independence life in Namibia:
“Give this boy a rack of lamb, an ounce of meat and a gallon of milk.”
This was the unusual instruction given to a shopkeeper in reference to the carrier of the note, a grown black man. It was regardless of whether the note carrier had a name. They were only known as a boy, because black people were only useful to the extent of giving their labour to whites.
Liberation struggle icon and author of the book ‘To Hell and Back’, Ngarikutuke Tjiriange shared these bitter memories of racial segregation that stung like a wasp with Nampa, ahead of Namibia’s 27th Independence anniversary to be celebrated on 21 March.
Although his recollection is dotted with humour, Tjiriange describes the former South African apartheid regime as one of the most gut-wrenching notorious regimes on the African continent, citing brutal killings of the innocent and terrible treatment of black people.
There were a few shops where black people could enter while white people were inside. These were food markets which had a counter reserved for blacks, selling products that were not popular amongst white people, like brown bread.
The only way to access the luxury foods for whites was with a letter that was written by the white employer. They would say: ‘give this boy this type of meat’.
“We were sold parts of meat that they (white people) did not eat, like bones.” 
But with that letter they would go to the butchery and get the meat for their boss.
Eventually, the oppressed cunningly started copying the letters to access the same foods white people ate, like meat and alcohol, for themselves.
Tjiriange was born in 1943 but grew up in Klein Windhoek, an area which was known as Okongova.
He says areas like these were only reserved for whites. The only way a black person entered such areas was if they were providing cheap labour for the white employers.
By the 21h00 curfew, any person found in a ‘whites only’ area was arrested and imprisoned. Similarly, having to go from one place to another was only possible with passes.
There were various passes that were used, such as the day pass and night pass.
“I personally was arrested three times because I did not leave the white area after 21h00 and was beaten up at the police station.”
Tjiriange also highlighted a spirited impartial and patriotic road in politics, which started at a young age of 19.
The Swanu-Party was the first political party started in Namibia in 1959.
The formation of the Owambo People’s Organisation (OPO) followed later the same year and was renamed the South West Africa People’s Organisation (Swapo) in 1960.
Despite being Otjiherero-speaking, Tjiriange joined Swapo instead of the Swanu-Party which enjoyed more support amongst Ovaherero people.
“Swapo was the tool we used to liberate ourselves. As young people, we thought it was better to die fighting than to die as servants of these people in our country.”
The Swapo Party, he explains, was organised in two structures: The national headquarters and the lower structure which was divided into sections.
Windhoek was one section and other towns like Walvis Bay were sections.
Tjiriange became a section leader for Swapo in 1962, two years after the party’s formation, at the age of 19, preceding the late Joseph Ithana, husband to current Minister Home Affairs and Immigration, Pendukeni Iivula-Ithana.
Today, these sections are known as districts.
In 1964, he left for the Bechuanaland Protectorate (Botswana) which at the time was a colony of Great Britain.
He and several others were arrested and detained in Bechuanaland for several weeks. Together they managed to sneak out a letter to Britain informing the British that they had been imprisoned in the Queen’s colony for no reason.
“You must wonder how we got the letter out of prison. People were bringing us food from outside. So, we placed the letter between the plates and sent it off to Britain. A few weeks later, we were released,” he smiled in triumph, like a man who had just been exonerated and released from prison.
Looking back at how Namibia has transformed in the past 27 years, Tjiriange says the country is not yet free as it now has to be liberated from hunger, poverty, desperation and ignorance.
“The struggle for independence was not by the barrel of the mouth, but by the barrel of the gun.”
He adds that a battle of the mind which does not require weapons is now required to fight the scourge of poverty.
He also notes that those in positions of power should remember that they are not bosses, but servants of the people.
“Don’t be intoxicated with your own power. You must serve the people to the best of your ability.
“There is no substitute for respect and commitment to the well-being of the people if you are a leader.”
Tjiriange was the first Minister of Justice in an independent Namibia in March 1990, after having served as Swapo Secretary for legal economic affairs. He also held the portfolio of Swapo Secretary General before he retired in 2006. Tjiriange is the current chairperson of the Swapo disciplinary committee.