We are in an African standoff

(First appeared in New Era 6 May 2015)

Today’s column is a play of words on the saying “It is a Mexican standoff”. A Mexican standoff refers to when two or more opponents have their guns drawn and unless there is an agreement to stop, all parties will die regardless of who pulls the trigger first. This remains unresolved until some outside event makes it possible to resolve it. It is used in today’s column to symbolise the stand-off on issues of land and specifically access to urban land.
The past week I was working in Onyaanya constituency of the Oshikoto region.  Unfortunately there were no suitable accommodation establishments that had place for the period within the immediate vicinity and I had to book into a guest house just outside Ondangwa. As it was a long weekend, I managed to take time in the evening to do some “window shopping” in the towns of Ondangwa and Ongwediva. I must add that I was glad that my employer had not paid my salary by the end of the month and I was actually glad (not really) as it was definitely tempting to go on a real shopping spree. I found almost all the retailers that you will find in Windhoek and even some that had not yet made it to the capital city.
The bad news was that more and more of the small- and medium-sized enterprises (SMEs) belonging to Namibians ae being displaced to make space for these multinational (mostly South African) companies. While appreciating the convenience of having a large range of well-priced goods within the modern mall environment, it is worrying that the only employment being created is for low-level front-end jobs and that more of our indigenous entrepreneurs are going out of business.
The same issue, foreign ownership, comes up in discussions of how property developers in the housing market are only catering for up-market, high-income earners and neglecting the indigenous low-income earners.
It would really be a good initiative for our local authorities to insist upon “Inclusionary Zoning”. This term (which was coined in America) refers to local authority and other planning regulations that require a given share of new construction to be affordable by people with low to moderate incomes. For example, the local authority or the Ministry of Local Government, Housing and Rural Development can insist within the purchase deed that 10% -30% of new houses and townhouse complex space be allocated to lower-income earners. The term specifically uses the word “inclusionary” to indicate that the policy is aimed at countering “exclusionary zoning” whose aim is to exclude low-cost housing from certain areas in a local authority.
While investigating this use of local authority regulations to provide a wider range of housing options I was immediately impressed by the two issues that will be addressed such policies. Firstly, the apartheid past has caused certain areas to still be markedly different based on the skin colour of the inhabitants and is considered one of the racial divides we need to address in an Independent Namibia. Secondly, the free market (or as our constitution states – mixed economy), has been driven by profits and these are obviously at the high end of the market where top dollar can be charged and profits are the primary purpose.
The biggest benefits include, but are not limited to a) the creation of income-integrated communities, b) reduced bussing and commuter costs borne by the local authorities as they must presently provide subsidised travel for low-income earners who provide the home work force in high income areas; c) equality in access to schooling and other government services across communities; and d) perhaps most importantly speed up the process of reconciliation by eroding the apartheid land usage policies based on colour.
I must end this column with a reminder that what started me on this route of thinking was the shopping malls mushrooming all over the country that are not catering for our SME’s. The Government of Namibia must implement a policy of inclusionary zoning that will force property developers to include an SME park area within their complex. This will encourage entrepreneurship and decrease the feeling of “loss of participation in the economy” experienced among the people.

Too Good To Be True

(First appeared in New Era 18 April 2015)

The heading of today’s column was originally from the title of the essay “Siquila too good to be true” by Thomas Lupton in 1580. The term “too good to be true” expresses the unconvinced view that something that seems fine must have something wrong with it.
The past week I was looking at various options, I came across a number of businesses that promised me various levels of income and most of them indicated that it would be “easy”. I researched different businesses from online selling, private blog networks, Tupperware sales, Herbalife and even looking at becoming a Golden Products agent. Each of these businesses had very low entries into the business and was built on a multi-level marketing strategy (MLM). A Multi-Level Marketing is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant's "downline", and can provide multiple levels of compensation.
The selling point for each business was that I would make a lot more money if I recruit people who would also sell the companies products and I would make a percentage commission on their sales. To put it a little broadly, I would make more money if I have more people recruited, and they were doing the actual sales.
As a consumers we always dream of having more money to spend and we need to differentiate between a legitimate business opportunity and a business opportunity that “is too good to be true” and which will lead to you losing your money.
One of the most harmful scams that happens to people is when such a scheme turns out in fact to be a pyramid scheme. For you to be sure you do not get caught – and lose your money – is to learn how to identify a pyramid scheme and which regulatory authority you can contact if you believe you might be involved in such a scheme.
So what is a pyramid scheme? Any multi-level marketing company must have a product or service that they sell to a client. Normally a business that has a product you personally can, and wish to, use makes for an easy product to sell onwards to clients. If a company is selling overpriced and difficult to sell products you should already be wary of the business. As a consumer (and potential entrepreneur) you will have to purchase a minimum amount of product from the company which you in turn must sell for you to make money. Once you purchase enough of the product to qualify for commissions you will start to realise it is difficult to resell the inventory.
At this point you will learn that recruiting others to become agents or distributors is the only way to have a chance of recovering the money you invested. The person or company that recruited you will start to pressure you to increase your sales through getting others to become distributors. This emphasis on “recruiting your downline” is an indicative sign that you are dealing with a pyramid scheme. A pyramid scheme can only survive if there is a constant flow of new consumers to buy in the bottom or entry level.
So, how can you protect your hard money? The following questions should help you to check if the company meets the pyramid profile. Does the opportunity offer a large monthly income for very little work or even simply for working from home? Does it require you to put some of your own money into then business by buying a product or service? Does the company insist you pay a membership fee? Is there a strong emphasis on how much money you will make according to the number of people your recruit? Is the commission structure very complex?  Does it sound too good to be true? If so, it probably is.
If you believe that an opportunity might be a pyramid scheme you can contact the Bank of Namibia which is continuously refining the provisions relating to illegal financial schemes also known as pyramid schemes.

Home is where the heart is

(First appeared in New Era 15 April 2015)

The heading of todays’ column is a quote from Gaius Plinius Secundus (AD 23 – August 25, AD 79), a Roman better known as Pliny the Elder. He was amongst others an author, naturalist, and philosopher, as well as naval and army commander of the early Roman Empire. He is also well-known for the quote, “There is always something new out of Africa.” (Source: Wikipedia)

As a newlywed couple, my wife and I have started looking at a house to purchase as the present place we call home is a rental and is not putting any long-term value on our balance sheet. The cost of housing is already well-known and most of us have heard the cry of “Affirmative Repositioning” which seems to imply that land for housing must be made available for all Namibians. However, regardless of whether you purchase an existing house, or get a serviced erf from the local authority, you must still be aware of the hidden costs in the purchase of a property.
Most buyers are not aware of these hidden costs which include costs to transfer the title deed onto your name, registration of the bond, service connection costs to your property and most importantly your loan repayment that could increase due to interest hikes. As part of our homework into purchasing our ideal home, I have tried to define these hidden costs. To provide an indication of what these costs can be, I have used a house purchased for N$ 1 million in the example and placed the estimated hidden cost in brackets where possible.
(a) Transfer Costs – this is the legal cost of having the house registered in your own name and includes deeds office fees (N$ 300); Stamp Duty (N$ 4,000); Transfer Duty calculated as a percentage of the property value (N$ 4,000); Transfer Fee (N$ 10,000); Admin fees (N$ 400) and VAT at 15% (1,560). Total Transfer Cost = N$20,260.
(b) Bank Charges – most commercial lenders charge a bond initiation fee as well as a bank administration fee. These are charged up front and added to your account. Once the property is registered in your name, (and this might happen even before you move in), your monthly repayment will start.
(c) Service connection costs – most local authorities and other suppliers of water, electricity and telephone expect a deposit before the connection is made and then charge monthly according to usage. Usage can fluctuate and be unexpectedly high during periods of personal problems and cannot always be accurately reflected on a statement due to “usage guessing”.
(d) Property Rates – this is a monthly fee charged by the local authority based on the municipality estimated market value of the property. This rate tends to increase by 8% per year and is presently N$ 0.000914 times the site value and N$ 0.000471 times the improvement value in Windhoek. Thus a property with erf valued at N$ 300,000 and improvement value of N$ 700,000 would have a monthly rate of N$ 603.90 or N$ 7,246.80 per year. (NOTE: Before buying a property, ensure that all previous service charges on the property are paid in full.)
(e) Monthly levies – these are only applicable if you are buying in a complex (sectional title). You will need to pay a monthly levy for shared services in the complex and these can be costly.
(f) Maintenance of your home – there are always thing that break and need to be fixed. Even if you rent out your property, remember that certain items are still your responsibility to maintain.
(g) Insurance – you will need homeowners insurance that will cover any unforeseen circumstance such as your house burning down, etc. In addition, the bank will probably also require you to take out life insurance that will cover the rest of your bond owed in the event of your death.
If you can budget properly and identify all these hidden costs to ensure no surprise, you will enjoy your home for many years.
As for my wife and I, we have decided to go back to the drawing board and find an additional form of income to increase our ability to own a home.

Nothing can be said to be certain, except Death and Taxes

(First appeared in New Era 8 April 2015)

This weeks’ column heading comes from a letter written by Benjamin Franklin, to Jean-Baptiste Leroy in 1789. The full quote is “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”
Last week I read with great joy that the pensioners would from now on be receiving an amount of N$ 1,000 per month. This news was provided by our President and confirmed by the Minister of Finance. If you remember dear reader, I wrote in the Consumer column of 28 January 2015, “.. would it also not be a sign of a mature country to provide sufficiently for our elderly with a state pension of at least N$ 1,200 per month? If we give this a little thought, perhaps we too can honour our mothers and fathers that our days on earth might be long.” It appears our political leaders have heard the voices of the masses and have shown their respect too for our elderly.
The 31st of March typically indicates the end of the financial year for government for government and the start of a new contract period for people like myself who work on an annual basis with a government department or institution. This brought me to the payment of personal taxes as I have to receive my Pay As You Earn (PAYE) slips and submit to the Ministry of Finance. This personal tax is after all the money that the Government earns and allows them to provide for bigger pension pay-outs for our elderly.
As consumers and taxpayers not all of us have the ability and expertise to always fill in our tax forms to the best possible advantage and thus receive the “tax breaks” enjoyed by some. For some taxpayers there even periods of time that they were unemployed and did not perhaps fill inn their tax returns.
I would like to propose to the newly appointed Minister of Finance that the government introduces a tax amnesty. A tax amnesty is a limited time opportunity for taxpayers (or a specified group of taxpayers) to pay a defined amount in exchange for which they receive forgiveness of a tax liability relating to a previous tax period without fear of criminal prosecution. In terms of an amnesty, I propose that the Minister give ALL Namibians an amnesty for all previous years that tax returns have not been submitted on condition that all outstanding returns are completed – especially for the period ending 28 February 2015 – before a set date. For example in this year, amnesty could be given until 30 June 2015.
An amnesty will allow the government to collect as much tax revenue as possible in a very short period of time. Typically all taxpayers should submit their returns before the amnesty closing date and in return the government can reduce penalties or even waive all penalties completely. This will allow taxpayers an opportunity to pay any outstanding taxes with fewer penalties (or no penalties) than might otherwise apply. For a taxpayer to qualify for the amnesty, they must pay the entire amount of taxes due by the program’s deadline.
Having spoken to many consumers, especially in the lower income brackets, it was noted that many did not have a lot of knowledge of taxes and simply accepted that the tax deducted by the employer (if they have a job) is done correctly. In quite a few cases it was found that taxpayers have not done the necessary paperwork and submitted their tax returns as expected.
Thus an amnesty must go hand-in-hand with a taxpayer education programme to assist in ensuring they too can benefit from the process. Taxpayers not only benefit through the services such as roads, etc. that the government provide, but can also benefit through tax returns if they qualify and know how to go about filling in the forms correctly.

Mother knows Breast

(First appeared in New Era 1 April 2015)

The past week has seen me working in Swakopmund again. As luck would have it, my wife and son could also join me at the coast so that we could spend some of the weekend – especially Easter weekend - together. After all, “All work and no play makes Jack a dull boy”. This proverb means that without time off from work, a person becomes both bored and boring.
One night we visited the Tug Restaurant near to the jetty for dinner. The place was reasonably busy and my wife and I enjoyed the excellent food that was served by a gracious waitress that timed each of our three courses perfectly. At one point my four month old son needed his “meal” and informed us in a rather melodious cry that he would wait no further. The restaurant had no problem with my wife sitting in our corner and breastfeeding him under a cover. None of the other patrons seemed disturbed either and I felt pleased that he was able to complete his meal without any disturbance.
This is definitely the type of service we expect from restaurants and I am glad to see that the breastfeeding was a “non-issue”.
Namibia as a country has a very positive culture towards breastfeeding and our health professionals are encouraging mothers to breastfeed until at least six months of age. For the first three months it is suggested the child only gets breast milk and even water is discouraged. Only if a mother has a medical condition will the state clinics make available baby formula (for free).  At first, this sounds like a cost saving measure but after careful investigation it also turns out to have very solid science behind the advice.
“Breast milk is best for your baby, and the benefits of breastfeeding extend well beyond basic nutrition. In addition to containing all the vitamins and nutrients your baby needs in the first six months of life, breast milk is packed with disease-fighting substances that protect your baby from illness.”
During my first marriage, the wife and I were very “career-orientated”. This meant that we took the children off the breast early to allow the mother to return to work as soon as possible. Looking back, it seems we could have done a little bit more to ensure the long-term health (both physical and mental) of our children. In the recent past, researchers have found a correlation between children’s susceptibility to diseases, their ability to deal with vaccines and the foods that they start eating before six months of age.
Doing a little bit of research I came across the following universally accepted advice: 1) If you can, breastfeed for at least a year.  2) Minimise sugar and junk food as sugar weakens the immune system. 3) Minimise chemical exposures from the food your child eats. Eating organic fruits vegetables, etc, means a good way to help insure a healthier body and brain. 4) Use Omega-3 oil supplements (which breast milk is full of).  5) Make sure your infant gets enough Vitamin A as this can limit vaccine reactions.
As consumers (and all busy with the rat race), we have very little awareness of what we actually put into our mouths to ensure a healthy body and brain. More often than not, we get side-tracked in the importance of earning a living that we forget to invest in living a life rather than just earning.
That is why it is important for the consumer movement to stay vigilant on the foods that we buy – whether raw or processed – to ensure the long-term health of each of us. Wherever business puts in additives or genetically modifies or foodstuffs, keep in mind that it is being done for a profit motive – not necessarily to ensure the longevity of their consumers.