Local businesses are up in arms over what appears to be unwritten government policy to award a majority of its tenders to foreign companies, mainly Chinese, at their expense.
The alleged pro-Chinese bias of the Central Procurement Board (CPB), the government entity entrusted with awarding tenders on behalf of government and government entities, has caused uproar among local companies, who question the rational of the CPB, considering the fact that many local companies have the capacity to carry out major projects.
Government’s apparent laxity or perceived reluctance to award tenders to local companies flies in the face of a clause in the Procurement Act, which calls for preferential treatment of local companies when it comes to awarding tenders.
What has, however, raised even more concern among local businesses, is the failure of government to bring the clause into effect, despite the fact that the new Procurement Act was operationalized three years ago.
According to the Act, “the Minister may grant preferential treatment in procurement in pursuance of the developmental and empowerment policies of the government,” something Finance Minister Calle Schlettwein is being accused of turning a blind eye towards.
The local companies also argue that foreign companies that have been awarded government tenders are not compliant when it comes to entering into joint ventures with local companies. Their key staff members are not 60 percent Namibian, an industry source told this newspaper.
The Act requires that public entities should encourage and promote joint venture arrangements between foreign entities and Namibian bidders in setting a proper weight in the criteria for their evaluation in the procurement plan. “A public entity must consider and give more rights to entities that demonstrate that more than 60 percent of key employees are Namibian,” the Act stipulates.
When the Windhoek Observer contacted the Ministry of Finance over its sluggish approach when it comes to enacting the required regulations, Director: Legal Support, Compliance in the Public Procurement Unit (PBU) of the Ministry of Finance, Phineas Nsundano, said although the ministry has already submitted the draft code to the Ministry of Justice, his department lacked the capacity for its implementation.
“We submitted a draft last year November to the Ministry of Justice and we will be meeting in the last week of January regarding the code,” he confirmed. Quizzed on why it has taken the ministry three years to act on the regulations, Nsundano shrugged off the probing and said there are valid reasons for the impasse.
“The recruitment process of members in the department takes a long time and then there is six months vetting to be completed and if a person does not qualify, the process has to start all over again. I was only engaged in February 2019, so we started in March and the department which should have seven staff members, currently only has two. We face capacity challenges.”
“Although Namibians should have benefited, our policies must comply with those of SADC and SACU. There are various laws that need to be considered before policies are enacted. So, we need to be careful when drafting our own policies,” he offered. According to him the ministry has already issued a directive on preferential treatment for locally available goods, although it still is not official policy.
“On the 17th of May the Minister did issue a directive to give locals preference. Goods that can be sourced locally must given preference and can only be sourced elsewhere if they can’t meet demand,” the finance ministry director said.
On the thresholds that apply to preferential treatment for local suppliers, Nsundano had the following to say: “For goods and services, the threshold is N$25 million and above that it must be referred to the Central Procurement Board. For consulting services, the threshold is N$15 million.”
He says it is unfortunate that people view the Procurement Act as an impediment to development, yet it is supposed to safeguard organizations against the malpractice of inflating tender amounts.” Northern businessman Ben Zaaruka said the country should not be having a debate about the preferential award of tenders to Namibians 3o years after independence.
“If we are having this debate, something is not right. I should not be the one to answer as to why we are having this problem, since the government of the day is the one that should provide those answers. Inasmuch as we are fighting for more government jobs for Namibians, it must be fair and just to all Namibians,” he said.
Chinese and Indians taking over
Businessman Veiko Haimbondi said it was alarming that the Chinese have virtually taken over control of the country’s construction sector, thanks to government’s stance on awarding tenders. He says this has eliminated jobs for locals, adding that vendors from India are now making inroads in the retail sector.
“Business people are there to promote the economy and to meet government halfway in addressing the plight of the needy. But these days you find four to five local companies sharing a small tender, while big tenders are awarded to foreign companies, particularly the Chinese. During my time at the NCCI, I tried to speak out on these issues but I was accused of hating on countries that assisted Namibia during the liberation struggle,” he said.
“Today all construction projects are in the hands of the Chinese, while the Indians have cornered the retail sector. All to the detriment of our young people. There is a need for government intervention.”
Another northern businessman David 'Kambwa' Sheehama said the continued influx of foreign businesses into the country, especially Chinese companies is threatening the viability of businesses owned by enterprising youths and SMEs.
“The majority of the youth do not have a secure future. The Chinese are in all the corners of the country, occupying the Namibian SME business space. Over 70 percent of the economy is SME and yet it is given to the Chinese. This has become the norm in Namibia,” he said.
“Of course, we need investors in Namibia, even a million of them, but we need investors who will come and add value in our economy. Our economy is dry, that’s exactly how we are draining our economy. They don’t procure locally and their profits are also not spent in our country, hence that is money out of our economy and local circulation.”
Emerging businessman Hafeni Ndakunda dramatically ‘gave’ the Chinese companies an ultimatum to close their businesses and exit the country, and took a dig at the Namibia Chamber of Commerce and Industry (NCCI), accusing the lobby group of not doing enough to address the plight of local businesses in their fight against the influx of foreign companies in various sectors.
“Firstly, I have to commend the government for attempting to set up a platform on which business people can thrive. However, I must say that even though the intentions were good, Namibian businesses people are being pushed out of these jobs by foreign entities. We are not feeling the tangible results of government spending. We have faith in the country’s leadership but I think our institutions, like the NCCI are doing very little to address the issue. There is a need for a national indaba to address the matter,” he said.
“There is no protection for the locals, from the side of the State. Protection for example can come in the form of set criteria where tenders of a certain value within a certain sector can be reserved 100% for local entities. Local banks are also doing us a disservice by not being open to providing us with capital to enable us to benefit from these tenders. I do not know how foreign banks operate, but our foreign counterparts tend to have ready money to finance their contracts, which gives them an unfair advantage,” he said.
Ndakunda also accused banks of letting local businesses down through their stringent lending criteria, which affects the ability of the companies to meet the financial requirements of some of the projects on offer.
“Local banks are also doing us a disservice by not being open to providing us with capital to enable us to benefit from these tenders. Our foreign counterparts have money to finance their contracts. Pricing has become more competitive and the fact that everyone can register a business in Namibia these days means that we now have to compete with people – of foreign origin – who come with deeper pockets. It is as if our own system was never designed for us to benefit.
“The Chinese problem is a bread-and-butter issue and is bigger than it is made out to be. The Chinese are in all corners of our business sector and locals cannot compete anymore. I think the whole system needs to be reformed. It is as if we are in the so-called valley of the shadow of death, left to fend for ourselves while the taxman is watching our moves. And once you get your head above the water, you are fingered with this or the other accusation,” according to the irate emerging businessman.
Trade and Industry Minister, Tjekero Tweya when contacted, said his ministry was mainly concerned with attracting investment into the country and could not comment on the businessmen’s concerns. “My ministry is concerned with attracting investment into the country and not with procurement or the awarding of tenders,” he said.