Is cancelling all tenders the solution?
We take note of the recent letter by Finance Minister, Calle Schlettwein, to Permanent Secretary of that same ministry, Ericah Shafuda, in her capacity as Chairman of the Tender Board, which apparently that no tender awards should be made until such time that the financial year 2016/2017’s budget review and the reappropriation of capital projects is finalised.
We think that such a blanket cessation of tender awards may be too wide reaching, even if the action is temporary, and can hurt MSMEs that are dependent on small government contracts.
While the mega-million dollar tenders do bear some scrutiny in terms of alignment with available funds, the loss of the smaller tenders that are the life blood of hundreds of MSMEs around the country, will have a negative effect at the grassroots level that will be immediately and painfully detrimental to the economy and society.
We have seen the scramble of the multi-millionaire tenderprenuers and middlemen as they partner with foreign entities and fight each other for some part of the taxpayer-provided pie. It is unseemly and we question if such things are ever in the public interest overall.
But, we question if cancelling ALL tenders, including those targeted for Namibian MSMEs to provide specific products, services or equipment, addresses the goals of poverty reduction in Harambee, Vision 2030 and NDP4 (soon to be updated).
It is a fact that there are small to medium-sized local companies around the country that regularly provide specific products and services in demand by the government.
In fact, it is government policy to award these tenders to Namibian MSMEs to promote that sector in line with the Growth-at-Home strategy.
Government, as the largest potential business client for any company, is the source of revenue that is vital to the very existence of many MSMEs.
Winning a government tender to provide, for example, N$100,000 in printer cartridges, office supplies or kitchen aprons or embroidered t-shirts or photography services may be small when compared to a tender for N$2.4 billion for Neckartal Dam or N$1.5 billion for fuel storage containers at the coast or N$7 billion for upgrades to Hosea Kutako International Airport. But that N$100,000 tender can be the difference between an MSME staying viable and bankruptcy.
The two or three or ten employees of that MSME will be retrenched, any bank loans taken out to start the company will be in default, subcontractors to the MSME will go unpaid and yet another group of Namibians will sink from employed with an income to unemployed and penniless.
The entire community affected directly and indirectly by that MSME will also pay the price of a cancelled tender.
In Namibia, the last household survey indicated that one job, feeds 6-8 people in a family. Is it prudent therefore, to cancel tenders?
The smaller subcontractors, particularly those seeking construction tenders, already face extreme financial pressure due to the slow payment by government on existing contracts. They will likely collapse if there are no new contracts, even over a short period of time.
We question if it makes sense to have a ministry with a mandate to promote MSMEs and entire programs with private sector banks and the government funded SME Bank to increase access to finance and at the same time, actions by another ministry cripples those same MSMEs by cancelling the tender process that many of them depend upon.
At some point we need to question why our government constantly seems to unilaterally cancel contracts, rescind laws and regulations and postpone implementation of agreements or issue cancellations, usually ‘with immediate effect’?
There is a sense that our decision-makers enter into activities that are not well-planned or agree to payment structures that are not reconciled with longer term budgetary realities. This recent action to halt the Tender Board’s work fits snugly into that mould.
The MSMEs that compete for tenders as their main income source are trembling each day that this situation remains unclarified.
Many are asking if the tenders submitted before the cancellation are still valid?; are those who won tenders, but have not yet completed the contract signing process going to get paid?; and are upcoming tenders that are time sensitive (i.e., materials may have to be ordered well in advance from abroad) going to happen at all?
They are asking if the cancellation covers all government tenders or just those that go through the Tender Board, and if an MSME should retrench staff until the cancellation is lifted? These concerns are flying around the MSME community and they require prompt attention.
It is prudent to cautiously evaluate high value tenders to ensure that our strained budget can bear the cost. The old African saying, states that when elephants fight, the grass gets hurt. MSMEs seem like the grass in this story.