Sven Thieme’s grandfather, Werner List, founded Ohlthaver & List (O&L), the largest private-owned conglomerate in Namibia.
Ohlthaver & List, which has annual revenues of more than US$400 million and 6300 employees, owns Namibia Breweries Limited, the largest producer of beverages in the country.
Besides PnP, O&L’s other assets include Namibia Dairies, the country’s largest dairy company, and hotel group O&L Leisure Namibia among other companies.
“The O&L Group showed the best profits ever this time around, amid the recession. It shows that our culture is extremely resilient. Our resilience comes from our people, like Morkel.”
It is now 20 years that Angelo Morkel has been with Pick ‘n Pay (PnP) Namibia. Recruited as a grocery-packer straight from high school a few years after Namibia’s independence, Morkel thought he had seen it all in the retail industry where he has risen to regional manager.
Alas, an economy-crippling recession, a first for independent Namibia brought out not only the best for Morkel, but for Pick ‘n Pay and holding company, the Ohlthaver & List (O&L) Group.
“We were worried to learn that the Southern African franchise of PnP was retrenching about 3500 employees in RSA to reduce business costs amid a recession. Most employees in Namibia thought, if it could happen to South Africa, then the worst was to fall on Namibia,” he says.
With both countries’ economies in parallel, it has become an economic and political apparent that if South Africa catches a cold, Namibia would sneeze.
However, instead of the impending axe, Morkel was promoted to regional manager of Pick ‘n Pay Wernhil Park, right in the middle of the recession, and none of the retail outlet’s employees were sent home. Namibia like the rest of the southern African region is facing rather uncertain economic times.
Neighbouring South Africa is on a negative ratings-watch by agencies, to the north Angola, just like Botswana and Zambia to the eastern borders continue to be negatively impacted by low commodity prices.
But while the economic growth slowed down to around 2.5% in 2016 from a previous estimate of 4.3%, where government revenue hit a 9% low, negatively impacting the customer pocket, Sven Thieme, Executive Chairman of the O&L Group says the demand for grocery provisions has continued to grow.
“The O&L Group showed a great performance this time around, amid the recession. It shows that our business is extremely resilient. Our resilience comes from our people, like Morkel.
I am personally involved daily and monthly in the training of our people. About 50% of my daily job is driving leadership. Thinking ahead.
We have sectors that are closing around the country who did not think ahead regarding valuing their people as assets,” says Thieme, listed amongst Forbes top 5 richest Namibians of 2017.
“The group has managed to grow despite the economic recession. Small reason we never retrenched,” he says, adding, “Our import and export operations have been resilient to the exchange rate. Our products do not have to wait for anyone.
The secret lies in value addition. We brew beer, produce milk and related products, process fish, our retail is 38% processing from meat, bakery and other. In industries where we should have slumped amid the recession like the brewing industry, we remained stable, and now we are picking up gradually.
This because the O&L group has created within the economy, its own economy which balances itself.
And the greatest equator is the people.”
Recent estimates indicate that the O&L Group generates revenues contributing roughly 4 percent to Namibia’s GDP. The Group has business interests in food production, fishing, beverages, farming, retail trade, information technology, property leasing and development, renewable power generation, marine engineering, advertising and the leisure and hospitality industry.
He credits the success of the Group, which has won repeatedly the Deloitte Best Company to Work For Survey in Southern Africa, to the GAP International concept.
It was in 2009 when O&L engaged American consulting and diagnostics company, Gap International to facilitate accelerated business growth and for Thieme, that came with the improved dimensions of higher risk, huge purpose, shared goals, self-empowerment.
“We became a people first company. Customers second. This helped us weather the storm. In fact, it challenged us to achieve further breakthrough.
The Group’s improved financial performance reflects in large measure the encouraging progress over the past year in investing in its people where many of its rivals reduced cost through stronger financial controls.
Namibia Breweries Limited (NBL) maintained its strong market position despite a strained local economy, challenges in export markets and declining consumer spending.
In their results for the half year ended 31 December 2016, Namibian, South African and export volumes increased by 1.1%, 33.1%, and 7.3% respectively. Revenue increased by 13.6% and operating profit was 6.5% higher than the comparative period.
But for Thieme, stronger financial controls are the smaller part of the puzzle, from both a business perspective and a national perspective. Calle Schlettwein, the Minister of Finance identified R5.5billion expenses that needed to be cut in the 2016/17 fiscal year where R1billion was re-allocated to urgent funding needs.
“I am worried about the national approach. The country has had little focus on value addition. The policies required to foster foreign direct investment have been in draft format since 2007. Only now do we see momentum.
Besides, corruption has been an acne. The tenders are allocated to suppliers who cannot deliver. By now, the amount of millions and billions lost to corruption should have gone to schools and hospitals for our people. We need to concentrate our efforts on poverty alleviation, tackling income inequality and achieving economic emancipation in earnest,” says Thieme.
With the South African economy expected to remain under pressure over the mid-term with 1.1% growth for the 2018/19 financial and 1.5% growth for the 2019/20, Thieme says a national economic resilience strategy has to be adopted.
He continues, “I applaud the new government measures where no expenses are being incurred without the approval by the Ministry of Finance. In fact, the new Procurement Act is key to a national resilience strategy.
There are indications that Namibia has survived the storm, but there are tougher measures that still need to be implemented if we have to adopt an economic resilience strategy. Not everyone will understand resilience. We need to create more policies, more value addition. Currently all the right things are being done but at a slow pace.”
Simonis Storm Securities has weighed in, “The Bank of Namibia cut interest rates by 25bps this year to 6,75%. Looking at the economic indicators, it is justifiable for Bank of Namibia to cut by another 25bps at its next meeting in December.
However, due to the current depreciation of the rand, we expect inflation to remain moderately high and interest rate cuts to be on hold both in South Africa and Namibia this year,” Simonis said.
In a surprise move, Moody’s Investors Service downgraded Namibia’s long-term senior unsecured bond rating from Baa3 to Ba1 with a negative outlook. This is a non-investment grade or ‘junk’ status.
Moody’s cited an “erosion of Namibia’s fiscal strength” and alleged “increasing debt burden” as concerning. It also noted limited institutional capacity to manage possible shocks and to address long-term fiscal rigidities. Moody’s also saw a risk with the Namibian government’s liquidity.
Argues Thieme, “A number of factors led to the current economic climate. However, we are where we are and should refrain from being stuck in the past.
Let’s focus on the future and move forward towards creating a future we want for our children and generations to come by fighting corruption, being more disciplined and implementing better policies that would ultimately increase the speed of ease on doing business in Namibia.
We need to have a different sense of urgency and as a country, we should never lose the opportunity of a good crisis.”
As the lingering shocks from the longest and deepest recession since independence continue, Angelo Morkel has no qualms, no job losses, a promotion, another possible 20 years with the company, all become the fundamentals of an O&L system where instruments in its people have become the greater infrastructure for the technical recession shocks.
“Even in the darkest hour of our country’s economic survival, O&L was still recruiting, innovating and promoting,” Sven Thieme sums it up.
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