Strikes holding the economy hostage

By Kelvin Chiringa
August 2016
Prime Business

While significant steps are being taken to bolster economic growth, illegal strikes making headlines in mainstream media are holding the economy hostage and pose a dire threat of compromising investor confidence.
The Namibian business community is faced with the challenge of how best to put to calm the volatile business environment that is at the mercy of workers prone to indulge on labour related demonstrations citing a cocktail of grievances.

 The current status quo is such that the local economy is grappling with a labour force that sacrifices productivity for remuneration by illegal means.
“There is a tendency in Namibia of workers wanting to do whatever they want to do and if the employers don’t comply, they simply take illegal action. It only affects productivity and it does not augur well for the level of competitiveness which we in the private and public sector are trying to achieve,” says Namibia Chamber of Commerce and Industry’s (NCCI’s) Chief Executive Officer, Taara Shaanika.

 With recent illegal strikes having gone without any legal consequences on the part of the striking work-force, the effect is such that it has created a conducive environment that promotes strikes almost in all sectors of the economy.

“While this comes in time to also blackmail employers, in most cases when there are no consequences for illegal action it does not discourage others from doing the same. Putting production on a halt at the expense of illegal strikes must be warranted with consequences,” says Shaanika.
Following a massive strike by fishermen in Walvis Bay, which stunted the country’s fishing industry, workers employed by an Italian company Salini Namibia, working on a major dam construction in the //Karas region, went on a striking rampage which resulted in hefty losses of N$2 million a day.
However, Investment Strategist at Capricorn Asset Management, Suta Kavari, advices that the wave of strikes which has hit Namibia so hard pose no significant threat to the country’s competitiveness and had no tremendous effect since the pool of investors poised on Namibia is narrow.
“We have such a narrow investor base in the country such that investors have just gotten a foot hold on Namibia and they have stuck to the investments that they have. You need around 35% of your investment in local assets, so they usually have that portion and the rest they invest offshore,” he says.

The analyst, however, admits that the recent labour upheavals could only pose a threat to the economic environment by not great a margin is that of Namibia’s South African neighbour.

“The strikes could have an impact but not to such a great extent as it does to South Africa where labor protests usually turn to be violent and prolonged,” says Kavari.

He nevertheless warns that if no significant efforts were taken to pacify and put a lead on possibilities of striking, and that if the strike action was to be left to be prevalent and turn into violent action, that could come in time to put a dangerous dent on the economy and investor confident thereof.

The boomerang negative impact and consequences of strike actions was however one of the dominating subjects of discussion at the previous Investing in African Mining Indaba in Cape Town, South Africa recently.

While Namibia’s need to expand its investor pool is out of question, Sibanye Gold Neal Froneman is quoted as saying, “Investors want certainty, they want a clear regulatory environment, and they want an environment in which companies are not held hostage by unreasonable demands and cost escalations .”
 Speaking to Prime Focus, economic advisor Annie Marie underscores that although Namibia has not had a demonstration that has had the outreaching impact of devaluing the Namibian Dollar, labour issues are a great factor of investment attraction.

“Generally in Namibia, we have had a situation where we have said the dollar has fallen because of the Neckertal strike, but perhaps it’s more from an investor’s perspective to say how that derails your project. Labour issues are basically a big component of investment attraction because you do not want to put your millions and your production is standing because of the employee,” she says.