Shebeens Key to SME Development

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By Petronella Sibeene WINDHOEK Despite the many negative aspects associated with the sale of liquor, and, particularly with unlicensed shebeens, these liquor outlets continue to play a positive role in the development of Namibia’s Small and Medium Enterprise (SME) economy. According to the economist and Portfolio Manager for Rand Merchant Bank Asset Management, Martin Mwinga, the Namibian economy is presently divided into two parts – the first or formal economy and the second or informal economy. Shebeens are part of the second economy and are making a positive contribution to the economy through job creation (self employment) and poverty alleviation where income generated from shebeens is used to finance education and support families. He argues that the mushrooming of shebeens in Namibia is a sign of entrepreneurship. “During the early stages of economic development, the entrepreneurship spirit always emerges in the informal sector of the economy. Instead of destroying this entrepreneurial spirit, successful/developed countries helped these informal business owners to graduate from the informal economy to the formal economy through incentives,” he says. The economist told New Era that if the country is prepared to support unsustainable investment projects like RAMATEX, why not do the same to the informal shebeen owners who are more sustainable and cheaper to maintain. He added; “The well-established business as we know them today started as informal businesses and were nurtured and supported by their governments. “The new entrepreneurs are establishing shebeens as a first step towards the bigger goals of setting up business empires with Namibian roots.” Shebeen owners are generating enough money so that it finds its way into the banking system. And in return, banks use these savings/deposits to lend to the first/formal economic sector and therefore keep the engine of the economy moving. Shebeens furthermore buy their products from suppliers in the first economy and therefore generate demand for their products and keep the economy going. Since shebeen businesses are scattered all over the country, they are well entrenched in the Namibian economy and have a large multiplier effect on the economy. Therefore, the impact of closing these shebeens will be felt through less cash deposits in banks, low demand for products and an increase in crime because people who had something to do before become idle and unproductive. Shebeens in Namibia have more than 6000 people involved as owners with close to 75 000 people employed. Most people, according to Mwinga, opt for shebeens as there is little capital requirement involved and they are easy to run and manage. “There is demand for beer, drinks, meat, etc, and income and profit comes in quickly that allows them to move into other businesses. This is Stage One – the business owner learns how to run a business before moving to more complicated businesses,” he explained. Mwinga feels there are other ways that could be used to regulate shebeen businesses rather than closing them down, without government creating an alternative source of income for these people. Moreover, Shebeen owners and their employees are counted as employed in the official statistics. So the unemployment figure of 35% includes shebeen owners and other informal business owners. If these businesses were closed down, unemployment would shoot up to even more than 50%. Mwinga explained that ” … the Ministry of Labour in fact says that the biggest portion of informal businesses included in the employment statistics is shebeen owners and their employees”. He claims that some senior government officials own shebeens and want to reduce the number of shebeens so that they increase their business by closing down the less empowered’ businesses. “The licence requirements could be too stringent e.g. having a toilet next to your shebeen etc – something that only rich government officials who owns shebeens can afford,” he said. Mwinga added that the Namibia government’s policy on SMEs was unfriendly and not supportive. He argues that if one is a registered SME, one should not be expected to comply with so many bureaucratic legal requirements, such as paying tax. Due to this unclear policy and lack of support for SMEs, many up and coming entrepreneurs opt to do business in the informal sector. Some people in the informal sector are there in an attempt to fight unemployment and selling liquor becomes the most profitable business, given the great demand by the masses. “Some of these entrepreneurs have seen a market opportunity and are taking this business opportunity. With time, they will graduate into other sectors.” Meanwhile, today about 6000 shebeen owners are expected to march to the National Assembly to present their grievances to decision-makers. Namibia Shebeen Association (NASA) president Veripi Kandenge yesterday confirmed that a meeting aimed at mobilising the masses to participate in the demonstration to the National Assembly took place in Tsumeb on Monday and yesterday, and the group moved to Ondangwa on the same mission. The Windhoek march will start from the Taxi Rank near Wernhil Park, taking Man-dume Ndemufayo Street and Fidel Castro Street to the National Assembly where a petition will be presented to the Speaker of the National Assembly, Theo Ben Guri-rab, Kandenge says. According to the NASA President, the association decided to march to the National Assembly to present their grievances to people entrusted to make decisions on behalf of all Namibian citizens. He added that ” … we want all parties and ministers to thoroughly debate this matter”. About a month ago, hundreds of shebeen owners marched to State House to present their complaints to President Hifikepunye Po-hamba. Two weeks ago, the President held meetings with different stakeholders, such as the Council of Churches in Namibia (CCN), on how best to tackle this pressing issue. However, during the official inauguration of the Okongo Police Station in the Ohangwena Region last Friday, the President defied the shebeen owners’ call for him to allow the re-opening of their closed unlicensed liquor outlets and to order the police to stop with their current “No Shebeens’ operations campaigns. Kandenge demanded, ” … that we want the answer now. Yes, go and sell is what we want to hear, we will not go for a ‘No’ as an answer, nothing else”, he said adamantly. Pohamba declared he had no constitutional right to prevent the implementation of any law. He said, that the Liquor Act No. 6 of 1998 was passed by Parliament about seven years ago and the law enforcement agencies were just implementing it by asking people selling liquor without licences to stop doing so. “But, those selling liquor must have licences to do so, otherwise no selling of liquor without a licence in this country,” he stated. The President went on to say that he has a problem leading a nation of drunkards, an idea supported by the CCN and King Kauluma Elifas when they met Pohamba to discuss matters surrounding the shebeen issue in Namibia two weeks ago.