The Central Procurement Board of Namibia has shockingly admitted making a blunder on a multimillion-dollar tender.
The admission is that they failed to perform any due diligence to confirm whether local businessman Shapwa Kanyama owns an operational condom or surgical glove factory.
During a presentation on Wednesday to the Parliamentary Standing Committee on Economics and Public Administration, CPBN chairperson Amon Ngavetene stated this was a learning experience for the board to not just rely on documents or hearsay, but to go on the ground to verify for themselves before granting contracts.
The company under the spotlight is Amnics Trading, owned by Kanyama.
The CPBN board also admitted it only relied on documents presented by Kanyama, but never verified the information contained therein. This means the CPBN awarded a N$650 million medical supply tender to that company without any physical verification of operational capacity.
Kanyama’s Amnics Trading managed to beat other bidders, some of whom provided more affordable tenders, on the basis that it is a “local manufacturer.”.
“We went on the basis of the documentary evidence that was before us, and we did not go straight down to the factory to see whether it was really happening or not. And I think on that basis, we have acknowledged that it was a shortcoming on that part,” Ngavetene admitted, as visibly shocked MPs looked on.
Based on the Kanyama experience, Ngavetene stated this week that the CPBN has embarked on a new stage in terms of conducting due diligence.
Selling tenders
Meanwhile, the CPBN has brought to the fore another challenge: Namibians selling tenders to foreign entities and individuals. Ngavetene said the board has dealt with 193 procurement contracts awarded: 177 went to Namibians, only 11 went to foreign companies, and five went to joint ventures (JVs).
“What we are picking up is mostly between Namibian companies and the Chinese JVs. It’s all done for the purpose of getting the tender, and the Namibian is paid out, and then the Chinese run with the project. Obviously, leaving Namibians in the same position means that you don’t have the skills; you don’t have the knowledge, and so on. And the reasons we promote JVs are for skills transfers and experience. But I think obviously that is getting defeated,” he emphasised.
A member of the committee, Popular Democratic Movement lawmaker Nico Smit pressured the CPBN, saying there should be fairness in tenders, and that the board is dealing with the bulk of money intended for development in the country.
It is his fervent position that the CPBN must allocate the bulk of that money to Namibians, not foreigners.
He emphasised that only those capable of doing the work should get contracts.
“We need to keep the money in the country, and do away with foreigners. We can only develop our people and our country if we keep that money in the country,” said Smit. He added that local entrepreneurs should assist the government in fighting socio-economic challenges.
“Unfortunately, the culture in the country at the moment is that of consumption,” said Smit, adding that “some of the colleagues getting tenders take this money and go buy luxurious cars, with no focus on helping the government fight challenges. The little profit you make should be reinvested in business to create more value, create employment and create sustainable enterprises.”.
Sharing the cake
At the same occasion, fellow PDM lawmaker Maximalliant Katjimune said local entities, particularly SMEs, are experiencing some impediments when it comes to competing for tenders.
In a recent motion to parliament, he called on the House to study the obstacles surrounding SME financing in Namibia to unlock greater access and economic potential for this critical sector of the economy.
Katjimune recommended a fundamental reform of the procurement policy to lower the cost of bidding, and make the process more accessible.
He also advised the committee to consider dividing tenders into smaller contracts to allow smaller companies to compete, and allow greater participation and benefits in the tendering process.
“More often than not, we see one company run by two individuals receiving a tender of N$600 million. Is it not perhaps better that the tendering process and contracts are in such a manner that the contract is divided into smaller amounts, and awarded to many companies so that it benefits a much wider pool of MSMEs than just one individual in one company?” the PDM lawmaker questioned.
He said around 70% of small and medium enterprises are estimated to fail almost immediately upon the commencement of operations. This is a worrying statistic that requires swift intervention, he continued. Namibia now has about 70 000 registered micro, small, and medium-sized businesses in a variety of industries.
The sector accounts for about 12% of the gross domestic product, and employs over 200 000 people.