Foreign firms cream off N$3b from tenders

Foreign companies creamed off more than N$3 billion from the country’s public procurement system through joint venture bids with locals and individual bids for national projects The Villager can reveal.

The bulk of the billion dollar projects where taken by Asian related companies, South African companies and Italian companies.
Statistics availed by the Ministry of Finance Permanent Secretary and Chairperson of the Tender, Board Ericah Shafudah shows that in 2013/ 2014 foreign entities creamed off N$32 885 910.75 on annual tenders , in 2013/2014 foreigners creamed off N$43 152 877. 09 from 10 formal tenders.

The statistics also show that multinational conglomerates in partnership with local firms made a staggering N$3 857 612 687. 61.
Formal tenders are tenders that are awarded on a once off period whereas annual tenders are those tenders that are awarded on an annual basis. Shafudah told The Villager that in the period under review (the 2014/15 financial year) the formal tenders were worth N$ 5 224 006 978.40.

Meanwhile, the annual tenders in the same period under review stood at N$ 44 162 100.60. “For the Joint Venture to be awarded with the tender, the percentage should not be less than 51% Namibian and 49% Foreign Shareholding,” adding that, “In the 2014/15 financial year we awarded 203 Formal Tenders whilst the Annual Tenders were 51,” Shafudah said.

Shafudah noted that the awarding of tenders to Foreigners is always a last resort but added that the tenders awarded were however made to Joint Ventures. The latest tender board statistics revealed that in the 2013/14 financial year, a total of seven Annual Tenders were awarded to Joint Ventures and their worth was roughly N$319.2 million.

However, a total of eight Formal tenders were awarded to Joint Ventures in the period under review and their worth stood at roughly N$3.8 billion. The Joint Venture initiative was part of the loopholes that were mentioned as the country opted not to award tenders to foreign owned companies.

Other loopholes stated within the procurement system was the fact that Namibians would sell their half of a Joint Venture to the foreign nationals. To curb the loopholes, the procurement bill had to be revised to accommodate the suggestions made by the business community and the public at large.

In an earlier interview, responding to questions sent to her by The Villager, Shafudah confirmed that the revised Procurement Bill that had to be drafted has been cleared on legislation by the Cabinet Committee. Shafudah however said that the revised draft itself has not yet been submitted or approved by Cabinet yet.

She however added that the revised bill will be submitted to the Chief Legal Drafters and the Attorney-General, Sacky Shangalah before submitting to Parliament. “The Bill has been cleared by the Cabinet Committee on Legislation. It will be submitted for certification by the Chief Legal Drafters and the Attorney –General. Then it will be submitted to Parliament”, said Shafudah at the time.

Shafudah noted that the revised Bill incorporates changes proposed following wider consultation with stakeholders. “The revised Bill will be availed after it has been cleared and presented to Parliament,” noted Shafudah at the time.

According to the latest statistics provided by the tender board, Annual Tenders awarded to Foreign Companies when that set up was still in place were worth N$32.8 million in the 2013/14 financial year and in the same period, the number of Annual Tenders awarded stood at three.

Shafudah further noted that in the period under review, a total of 10 Formal tenders were awarded with a collective value of N$43.2 million.In terms of the revised bill, the business community argued that the bill should encompass the procurement of locally produced goods in order to reduce the importation of goods from outside.

President Dr Hage Geingob stressed in his State of the Nation Address that the revised Procurement Bill should be presented in Parliament already in order to be approved for a wider spectrum of transparency whilst benefitting the Previously Disadvantage Namibians.Geingob noted that the bill should deliberately favour local business especially those businesses owned by previously disadvantaged Namibians.

In 2013, a new Public Procurement Bill was presented in Parliament when loopholes needed to be addressed, but it was withdrawn to allow for more consultative processes.

Under the new legislation, a Central Procurement Board will be a vital institution to be established and it will replace the current Tender Board as well as adjudicate over all major procurements, determined according to a prescribed edge.This means that the establishment of a Central Public Procurement Board, shall be a corporate body responsible for the approval of the award of contracts within the prescribed threshold by public bodies.

The public procurement will have a fulltime board made up of people who knowledgeable in procurement management, and will be supported by officers who have the required level of skills to perform procurement activities with a high level of competence.
The MoF started developing draft instruments for the implementation of the new system which will come into effect once the bill is approved by Cabinet and adopted.

A few of the vital aspects of the imminent change is that the new legislation will be mandatory to all public bodies, including Regional and Local Authorities, as well as State-owned companies and enterprises (SOEs).