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Confidence on the March General business confidence continues to improve

The IJG Quarterly Business Confidence Survey First Quarter of 2010

Introduction

The IJG Business Confidence Survey is a quarterly assessment of business expectations. This

survey was conducted in April 2010 by the Institute for Public Policy Research (IPPR). A

questionnaire was sent to 103 companies, drawn from Namibia’s largest employers across various

sectors of the economy, and 46 responses were received. The survey contained questions that

sought to gauge business sentiment in terms of performance, revenue expectations, workforce

dynamics and investment expectations.

Survey Highlights The previous quarter analysis indicated that the high consumption festive season that fell within the

period under review proped up business sentiment as revenue collection and general business

conditions improved during the fourth quarter of 2009.

• The fishing sector continues to suffer from the strengthening of the Namibia dollar against

major currencies as it is heavily reliant on exports

• The education and training sector experienced brisk business during the period under review.

They had to turn away prospective students due to limitations in capacity.

• The mining and construction sector appears to have recovered from the deep experienced

during the past two year

• A new section has been introduced in the sector analysis, which looks at the media industry.

Institute for Public Policy Research

Business Conditions and Performance

Companies were asked to rate general busi

March 2010) as compared to the previous three

The trend seems to be encouraging as, l

respondents said business conditions improved. In the first quarter of 2010, 42% of the respondents

saw business conditions as being better

percent (41% in the previous analysis).

giving the same response. Twenty out of the forty

business conditions from the fourth quarter of 2010

Forecasts of business conditions in the second quarter of 2010 largely depict a favo

49% of respondents expect business conditions to be better

the same, respectively. In our previous report, first quarter forecast

the respondents.

Revenue outlook

Worse

13%

Stay the

same

45%

Better

42%

IJG Business Confidence Survey

Respondents' analysis of past business

conditions

Decreas

ed

21%Remaine

d the

same

34%

Grew

45%

IJG Business Confidence Survey

Analysis of past turnover perfomance

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Business Conditions and Performance

ompanies were asked to rate general business conditions over the past three months (

ared to the previous three-month period.

The trend seems to be encouraging as, like in the last quarter analysis, a significant number of

said business conditions improved. In the first quarter of 2010, 42% of the respondents

as being better than in the previous quarter, a marginal increase by one

percent (41% in the previous analysis). The third quarter of 2009 also saw 42% of the respondents

giving the same response. Twenty out of the forty-five respondents (45%) did not record changes in

fourth quarter of 2010.

Forecasts of business conditions in the second quarter of 2010 largely depict a favo

expect business conditions to be better while and 47% said t

the same, respectively. In our previous report, first quarter forecasts turned out to be better for 35% of

Stay the

Respondents' analysis of past business

Worse

4%

Remain

the

same

47%

Better

49%

IJG Business Confidence Survey

Respondents' forecast of business

conditions

Decreas

Remaine

d the

same

Analysis of past turnover perfomance

5%

38%

0%

10%

20%

30%

40%

50%

60%

Decrease Remain the

same

IJG Business Confidence Survey

Respondents' turnover forecast

r the past three months (January to

quarter analysis, a significant number of

said business conditions improved. In the first quarter of 2010, 42% of the respondents

than in the previous quarter, a marginal increase by one

saw 42% of the respondents

not record changes in

Forecasts of business conditions in the second quarter of 2010 largely depict a favourable picture as

while and 47% said they would remain

s turned out to be better for 35% of

Remain

the

same

47%

Respondents' forecast of business

57%

Grow

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In this regard, companies were asked how they had performed during the past three months (January

to March 2010) in terms of turnover (income from sales of goods and/or services). In the fourth

quarter analysis, 59% of the respondents recorded growth in revenue, while the same was applicable

to 45% of the respondents marking a slowdown. The fourth quarter high was mainly due to the high

consumption festive season. For 34% of the respondents, turnover levels were the same as in the

fourth quarter (31% in the previous period’s report).

In the last three months of 2009, 10% of respondents recorded a decrease in revenue collection. This

figure increased to 21% during the quarter under review. In terms of revenue collection forecasts, 24

out of 46 companies expect better turnover perfomance during the second quarter of 2010 (18

respondents in the previous report).

Workforce Dynamics

In this regard, companies were asked if they would employ more, fewer, or the same number of

employees in the next three months (April to June 2010) as compared to the first quarter of 2010.

The percentage of respondents who will maintain the same number of employees increased

marginally by 2% to 64% compared to the first quarter of 2009. The encouraging thing is that there

are no plans to reduce the labour force, a positive sign on the back of the recently released high

unemployment figures.

Job creation forecast increased marginally with 36% of respondents, compared to 33% in the

previous period anticipating to employ additional workers.

0%

64%

36%

0%

10%

20%

30%

40%

50%

60%

70%

Less workers Remain the same More workers

IJG Business Confidence Survey

Respondents' decisions on labour

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Investment Outlook

Companies were asked if they were planning any major investments during the coming three months

(April to June 2010). Capital expenditure is expected in the second quarter of 2010, albeit at a lower

level than in the first quarter as 20 companies, compared to 23 in the last analysis, have investment

plans on their tables. Thirty one respondents had investment plans in the last quarter of 2009.

SECTORAL ANALYSIS

Agriculture

This time we did not receive any responses form the agricultural sector. We expect responses in the

next quarter since the grape industry’s peak period starts in June.

Banking and finance

Eight responses were received from this sector. For the majority of the respondents, revenue

collection was on an upward trend mainly on the back of increased credit extension in the aftermath of

the global economic crunch. Two respondents indicated that they will invest in upgrading their

information technology systems, while one specified banking system localization as an area that will

utilize much of their investment funds. Overall, general business conditions remain favourable, just

like in the fourth quarter analysis.

Education

The third quarter analysis recorded the first respondent from this sector. This time two institutions

participated in the survey. Both respondents said business conditions are improving as there is

overwhelming demand for the programs that they offer. They have both reached maximum capacity

and had to turn away prospective students at the beginning of this year. Revenue collection is set to

peak in the second quarter as students will be paying off the balance school fees owed to the

55%

45%

40%

42%

44%

46%

48%

50%

52%

54%

56%

No Yes

IJG Business Confidence Survey

Respondents' decision on investment

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institutions. The two institutions have investment plans, and one institution will add more rooms to its

hotel school at a cost of more than N$10 million.

Fishing

Four responses were received this quarter, an increase by one compared to the last two quarters.

The responses from this sector were not encouraging as all respondents do not expect improvements

in the general business conditions and have no investment plans. One respondent lamented the

strengthening of the Namibian dollars against major currencies as this caused a drop in revenue as

their business is mainly conducted in major currencies like the United Stated dollar and the Euro.

These results are similar to what was gathered in the last quarter’s analysis.

Health

Five responses were received from this sector. Business conditions were generally better during the

period under review. Like in the last report, one respondent based in Swakopmund attributed the

improvement in business conditions to the general population growth in that town due to increase in

mining activity. This has prompted the respondent to introduce new services and this will lead to more

jobs being created, as well as more capital expenditure.

Hospitality

We received three respondents from this sector this time. We did not receive any respondents during

the previous period. All indicators were positive, except the investment indicator.

Information and communication technology

General business conditions were generally better for the two respondents. More employees will be

brought on board and investment projects will be undertaken.

Manufacturing

Four manufacturing concerns responded to the questionnaire. Unlike in the last analysis where

indicators generally remained constant, optimism feature prominently this time with the current quarter

expected to be better in terms of business conditions and business performance. More jobs will be

created and more investment plans are in place, although no specific details were highlighted.

Media

This is a new addition to this series. We only received one respondent, a commercial radio station.

The respondent expects revenue collection to improve and business conditions to be better in the

second quarter of 2010. The respondent will not employ more people or invest in any major projects

in the second quarter of 2010.

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Mining and Construction

Five responses were received from companies operating in this sector, exactly half the number of

responses in the previous reporting period. General business conditions in both sub-sectors continue

to improve as market conditions change for the best, just like in the last quarter analysis. A relatively

new respondent that is still setting up operations is in the process of increasing its workforce in order

to have the right number of employees when they start operations.

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About the IPPR and IJG The Institute for Public Policy Research (IPPR) is a not-for-profit organisation with a mission to deliver independent, analytical, critical yet constructive research on social, political and economic issues that affect development in Namibia. The IPPR has been established in the belief that development is best promoted through free and critical debate informed by quality research. IJG Securities (Pty) Ltd, which sponsors the this Retail Survey, is one of Namibia’s leading financial services boutiques, serving the institutional and corporate market and specialising in research, debt and equity placement, corporate finance, and equity and fixed-income dealing.

© IPPR 2010

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Trustees: M M C Koep, D Motinga, W Lindeke, P Hailonga van Dijk, A du Pisani, R C D Sherbourne, G Hopwood (ex-officio)

14 Nachtigal Street � POBox 6566, Ausspannplatz, Windhoek, Namibia � Tel: +264 61 240514 Fax +264 61 240516 info@ippr.org.na � www.ippr.org.na