WINDHOEK - The Construction Industries Federation of Namibia (CIF) remains adamant that more bona fide Namibian construction companies will benefit from procurement activities by the government. The CIF proposes that criteria to determine benefits would be the extent of Namibian citizenship of shareholders, as well as of directors and senior management and of skilled and semi-skilled staff.
If a joint venture were to be involved, the CIF proposes that the citizenship of all partners in the joint venture should be considered. However, the federation also recognises that citizenship cannot be a sole criterion.
“Other factors that should be taken into consideration are the shareholding of the previously disadvantaged, women, the youth and disabled persons, the relative importance of which would depend on the size of the projects. Other important criteria are the financial strength and the technical skills and experience of the bidding entity, which become more critical with the increase of the size of the project. Established, large and major contractors should also be scored on their contribution to skills transfer,” said Bärbel Kirchner, general manager of the CIF.
To find an appropriate way to measure this, the CIF in the past presented its proposed categorisation of contractors within procurement thresholds to the Ministry of Finance in the past. “We are keen for our proposal of procurement preferences or similar initiatives such as set-asides that protect our local industry, to find its way into future regulations. This will ensure that our ‘local industry’ can most optimally benefit from any opportunities in the public sector,” Kirchner added.
The CIF holds the position that the local capacity must be utilised wherever possible. This, they feel, will not only ensure that businesses in the construction sector remain open and active and continue to deliver value to the local economy and provide employment opportunities, but will also ensure that the large-scale capacity of the Namibian construction sector is maintained and will continue to grow and with that, once again, become a catalyst for economic activity in other sectors.
Namibian citizenship of shareholder
With regard to citizenship, the CIF proposes that any bidding entities with less than 100 percent ownership by Namibian citizen for contract values of up to N$10 million should be disqualified immediately. For contract values of between N$10 million and up to N$50 million, the federation proposes that a minimum of 50 percent ownership by Namibian citizen of the bidding company should be required, to avoid disqualification.
This, said the federation, should also be relevant for any joint ventures, where each partner in the undertaking should meet the minimum requirement to qualify. If joint ventures are not scored separately, a minimum of 100 percent Namibian ownership should be a requirement for contract values of up to N$50 million.
“Therefore, any joint venture partner should have a minimum of 50 percent Namibian ownership. Even though a percentage of 50 should only determine the lowest possible ownership by Namibian citizen - or indeed a percentage of 100 Namibian ownership, which then would exclude joint ventures - those with higher shareholding by Namibian citizen should indeed be given preference by assigning a higher score rating in line with the increase of shareholding,” said Kirchner.
Taking into the consideration the current government-regulated categories within the framework of Namibia’s Public Procurement Act (2015), this means that the CIF proposes that all government construction, building, renovations and improvement projects for all category three (procurement threshold of N$20 million), category two (procurement threshold of N$30 million), and category one (procurement threshold of N$35 million) authorities, need to show at least 50 percent ownership by Namibian citizen of the bidding business entity.
Prevention of Tenderpreneurs
However, CIF admits that Namibian citizenship of shareholders cannot be seen in isolation. To avoid tenderpreneurism, CIF says it would be important that the combined citizenship of directors and senior management of the bidding entity/ies is also taken into consideration.
“To prevent poor quality of work, contractors with the required technical skills, know-how and experience should be appointed. This will make sure that the required standard and quality of work is met, according to the specifications of the contract. Restrictions to sub-contracting more than 51 percent of the contract would be better managed,” said Kirchner.
The CIF regards the financial strength – determined by proof of annual turnover in particular for projects exceeding N$10 million – as very important, as this often also determines the probability of completion of projects. According to Kirchner, financial strength should be determined by proof of annual turnover, based on annual financial statements of three years.
Technical Skills and Experience (Completion Certificates)
The CIF notes that the question of technical skills and experience will also become more relevant with the increase of the size of project. The federation therefore proposes that for projects with contract value of up to N$1.5 million proof of previous experience is not required. This, they say, would give start-up businesses the opportunity to enter the industry.
“For projects of value of above N$1 499 999, the recommendation is that there needs to be a track record of completion certificates up to the next category. These projects must be of similar nature. The non-availability of proof of previous contracts of similar nature, will lead to disqualification. This will ensure that projects are effectively implemented and will avoid involvement of ‘middlemen’, i.e. tenderpreneurs,” said Kirchner.
In addition, the requirement of a transfer of skills becomes important for projects exceeding the value of N$9 999 000. “Scores of up to three points can be secured. This would be established, for example, on the basis of number of bursaries, internships per number of employees, and the participation at training courses,” said Kirchner.
Equipment, material and service providers
Also, the CIF considered sourcing from local suppliers and service providers as critical. However, availability of local material is often a constraint in the construction sector.
“We believe that we need to look at all these criteria holistically in our adjudication of tenders. Currently, the level playing field is not in favour of Namibian contractors, who often cannot compete on price. However, we need to maintain local capacities to secure their continued contribution to Namibia’s economy. The more we engage local, the more we develop and empower our own people.”