Task Force Proposes Business Rescue Fund

Maihapa Ndjavera

The 11-member Business Rescue Task Force (BRTF), appointed by President Hage Geingob in July this year, delivered its interim report to the head of state on Friday.

His proposals included urgent intervention to finance struggling businesses as well as possible tax breaks and faster refunds of value added tax (VAT). The task force highlighted that these were some of its preliminary business rescue initiatives while noting that its overall mandate is to investigate longer-term systemic support through amendment of the relevant legislation. The task force is expected to submit its final report by March 2022.

Presenting the interim report, Thinus Prinsloo, Chairman of BRTF, said the current legislative environment provides for court management or liquidation as the only relief for creditors. As a result, he said, there is a need to change corporate finance legislation to ensure that businesses are saved rather than shut down.

“The recommendations and programs of the Harambee Prosperity Plan are essential to revive the economy. Along with the bailouts for businesses and the legislation in place to support them, other initiatives will also go a long way to boosting the economy, ”said Prinsloo.

The BRTF specifically recommends that principles be included in the companies law, the law on private companies, the law on the governance of public enterprises and the law on insolvency to help the intervention of troubled finance companies. .

“Funding and funding are the key aspects that will make or destroy everything that comes out of bailout legislation. Businesses are in trouble because they lack cash, and to save a business you need bridge financing, ”explained Prinsloo.

Through the preliminary funding recommendation, the task force also urged the government to explore the creation of a business rescue fund. Prinsloo pointed out that the four categories to consider are debt financing, equity financing, bonds and grants or donations.

In addition, the chairman of the task force said that the engagements with several stakeholders have highlighted serious challenges between banks and their customers in dealing with troubled businesses. Prinsloo said further soul-searching is needed to identify the root causes of these challenges.

Further considerations have been put forward for the Ministry of Finance and the Namibian Revenue Agency (NamRA) to consider a tax relief measure for businesses and to implement faster refunds of value added tax (VAT ) to ensure that businesses have a chance to survive the negative impacts of the pandemic. Other proposals included that the Social Security Commission relaunch its stimulus package for employers and employees, for local authorities and the Electricity Control Board (ECB) to deal with regulations, administrative burdens and the overall cost of public services, especially SMEs. “The Namibian Investment and Promotion Board should accelerate its facility for business analysis and implementation of improved service delivery. Also, reputable certificates should be relaxed when justified, ”Prinsloo suggested.

The President assured Geingob that the task force had conducted extensive research and conducted the necessary consultations and discussions with representatives of businesses, banks, insolvency practitioners, government and other relevant bodies to identify opportunities for specific policy interventions.

Commenting on the report, Prime Minister Saara Kuugongelwa-Amadhila said it is important that all stakeholders are involved to ensure that there is a common understanding of all the proposals. According to the Prime Minister, many companies are suffering and urgent action is needed, especially towards those companies which show a constant commitment and eagerness to contribute to economic recovery and growth.

“Stakeholder engagement is important, especially when there are funding issues and we will need to mobilize the range of options suggested. It might also require different resources to update the suggested funding modalities, ”noted Kuugongelwa-Amadhila.

President Geingob thanked the working group for its work and said he remained confident that the force would live up to its mandate. He also mentioned that the country has been severely affected by the devastating drought and the Covid-19, which makes the business environment even more difficult.

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2021-11-01 Maihapa Ndjavera

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