Finance minister Iipumbu Shiimi yesterday clarified that government resolved to use a portion of its expenditure in redressing socio-economic imbalances through the granting of preferential treatment or preferences in the public procurement system. 

Shiimi made these remarks during the implementation launch of the Code of Good Practices on Preferences as referred to in the Public Procurement Act (2015). 

Government expenditure is currently estimated at 20% to 30% of gross domestic product (GDP).

“Although preferences are an exception to the competitive supply principle in that public entities do not exclusively buy from the cheapest bidder, they have to be applied in an equitable manner without compromising the transparency and value for money principles,” the finance minister explained.

Preferences are special interventions aimed at empowering certain targeted categories of Namibian suppliers to enhance their participation in the mainstream economy and achieve specific objectives such as economic inclusivity and employment creation. 

Shiimi said there is evidence that socio-economic benefits from preferences far exceed the cost arising from restricted competition.

The finance minister is empowered in terms of Part 11 of the Public Procurement Act to grant preferential treatment in procurement by issuing the Code of Good Practice on Preferences.

Goals of the this preferential Code include granting exclusive preferences to local suppliers as defined in the recently amended Public Procurement Act, through the reservation of certain procurement of goods, works and services, to further grant price preferences during evaluation to categories of local suppliers, such as youth, women, MSMEs and manufacturers. 

These preferred suppliers will receive an additional price preference during evaluation and eventually be granted national preference.

The minister noted these preferences will be applied by the Central Procurement Board of Namibia (CPBN) and public entities for the procurement of certain goods, works and services. 

“For procurements that are subject to national preference, a margin of up to 10% price preference will be given to suppliers meeting the nationality requirements in section 71(3) of the Act and the qualification criteria specified under the Code for different procurements. In addition, exclusive preference is twofold,” Shiimi explained.

According to Shiimi, firstly, the nature of procurements in the Code is reserved exclusively for procurement from local suppliers who have met the nationality requirements and the local content requirement as determined in the Code. 

Secondly, a margin of up to 10% price preference will be granted to targeted categories of local suppliers specified in the Code in respect of the nature of procurements within the prescribed thresholds.

Meat north of the redline

Furthermore, the finance minister highlighted the Code also allows for preferential treatment for the procurement of raw meat of cloven-hoofed animals north of the veterinary cordon fence. 

He explained this preferential treatment particularly gives effect to resolution number 10 of the land conference of 2018, which resolved there should be special arrangements for northern communal farmers to produce through the public procurement system.

As such, the Code states that the procurement board or public entities must include provisions in their bidding documents, specifying that raw meat of cloven-hoofed animals, inclusive of beef, sheep, goat, pork or game, to be supplied north of the veterinary cordon fence, must be sourced from suppliers north of this fence.

“It is not allowed to procure raw meat of cloven-hoofed animals south of the veterinary cordon fence to be supplied north of that fence unless the supply of such meat north of the veterinary cordon fence is insufficient to satisfy the demand there,” the Code reads.

This Code of Good Practice will be implemented for five years from the date of issue. On the expiry of this period, the Code may, subject to review by the minister, be extended for a period not exceeding five years. 

“I warn that the Code of Good Practice should not be seen as a window for trials with opportunistic enterprises; therefore, public entities should assume high responsibility at all times and ensure that awards are made to legitimate businesses with credentials to guarantee that the public sector and Namibia, in general, enjoys value for money that it so highly deserves,” Shiimi cautioned.

The current procurement system recently erupted in chaos after a multimillion-dollar tender was awarded by CPBN to businessman Shapwa Kanyama. 

The CPBN conceded that no due diligence was done to determine whether businesses linked to Kanyama have actual manufacturing plants or if they merely exist on paper.

The only reason why Kanyama’s companies were favoured in State tender awards ahead of others, it is said, is because it presented itself as a ‘local manufacturer’. 

According to New Era reports, it has not been firmly established if Kanyama’s operations include local manufacturing. 

– mndjavera@nepc.com.na