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Sunday 21 July 2019
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Namibia’s tenderpreneurship dynasty on its knees

Namibia’s government-dependent tenderpreneurship dynasty has seemingly hit rock-bottom in the wake of the country’s financial turbulence. Cars are being repossessed, houses going on sale, companies retrenching as well as a lack of new jobs. These are but some of the firm indications of how dependent many tenderpreneurs are on the country’s multibillion dollar public procurement system. Although government never really indicated how much the tender system is actually worth, what is known is the fact that construction is one of the industries that has given birth to many tenderpreneurs. According to official data for the past three financial years, from April 2014 to the March 2017, a total of 108 building construction projects were awarded through the Tender Board, with an overall value of N$4.2 billion. About 84 percent of government building construction contracts are generally awarded to local firms but a significant number of such tenders end up being wholly subcontracted to foreign companies without the approval, and sometimes knowledge, of government. Most of subcontracted tenders often involve well-connected middlemen or tenderpreneurs as they are called with little or no skills to carry out a certain project.
The problem with the tenderpreneur system is that, sooner or later, legitimate firms, having no hope of getting the contract often stop tendering, which strips even the element of legitimacy from the process.  The reason why such a lot of cash flows from the contract is that the award value significantly exceeds the cost of the services, and the surplus goes into the pockets of the contractor and the officials who award the contract. A tender works like this: an official body (such as government, a municipality or a parastatal administration) needs something done, say, a sewer system installed or repaired, or a power line built. The official body hires consulting engineers, who do a design and write out a tender document with drawings, which specifies the works, and then asks contractors to price for them. On a given date, at a given time, the consultants open all the tenders and read out the prices and, hopefully, awards the contract to the lowest tenderer. The Construction Industries Federation (CIF) of Namibia recently said 63% of businesses have either closed down, are dormant, or have scaled down operations drastically and that between 1 September 2016 and 31 March 2017, a minimum of 30% of the workforce was retrenched. The CIF said the situation was likely to get worse, unless government finds a way to intervene and “if by the end of June 2017 no new tenders are being awarded, 67,39% of the responding businesses will have closed down, are dormant, or have scaled down drastically, and close to 40% of all employees in the sector will have lost their jobs.”
Namibia Chamber of Commerce and Industry CEO Tarah Shaanika says he sees nothing wrong with businesses depending on government at the beginning, provided that they diversify and lessen their dependence in terms of revenue in the long run. “It is not sustainable that is overly-dependent on government tenders, because in tough economic situations like these the company is bound to suffer which could lead to job-losses and companies shutting down,” said Shaanika. Shaanika said: “We do not want our children growing up thinking that tenderpreneurship is the way to go, we cannot have such role models, in order to industrialise we need to be innovative and come up with ideas that will help to grow the country.” Like many others, Shaanika expressed concern about the possible rise of corruption in the form of bribes, collusion and fraud through tenderpreneuring. “I am not saying all tenderpreneurs do it, but people will go to all lengths to get a tender, this could fuel corruption and we have discussed it as NCCI. This can be in the form of bribes where officials are paid to reveal information of a certain tender or to make sure a certain company gets the contract,” he said.
During an interview last week, Roads Authority CEO Conrad Lutombi said the roads agency does not “deal with briefcase contractors”, although the situation on the ground paints a different picture. There has been a huge public outcry in recent years over the manner in which middlemen inflate projects in the road construction industry. To ensure RA does not fall prey to such individuals, Lutombi said: “Our procurement process has always been that road contracts are awarded through a competitive Tender process and on merit, based on the submitted bidding documents. We also do due diligence to ensure that the companies that are awarded tenders have the capacity to do the works. The RA does not deal with “Briefcase Contractors” who aim to get Tender for on-selling for profit.”  Minister of Planning Tom Alweendo was frank during an interview with this newspaper this year when asked why local companies are not growing, saying “government has put in place measures to build local capacity, for instance, foreign companies are forced to partner with local companies It is unfortunate because that arrangement does not seem to be working because most of the Namibian companies teaming up with the Chinese are not growing, they are always small companies.” He also blasted the local companies of not caring about learning, adding: “Many are totally fine with just getting the money. Yes, they have the money, but from a skills and capacity point of view our companies are not growing and as a result the tenders always go to the Chinese.”

Politicians
Though President Hage Geingob and his Cabinet are gung-ho about plans to insulate the State’s tender system from abuse, there is one glaring contradiction-the reluctance to tackle the real problem: politicians’ private business interests that are effectively narrowing and blurring the distinction between money, empowerment and politics – especially when it comes to Government tenders.  Lawmakers have significant business interests though some of them refuse to publicly declare their assets and business interests. Many are said to also rake in millions through the multi-billion state procurement system. Parliamentarians have flouted parliament rules at will by not extending punishment to those who fail to declare. National Assembly lawmakers who served between 2010 and 2015 went through their term without making any declarations. Lawmakers are supposed to declare their shares and other financial interests in companies and other corporate entities; remunerated employment outside of parliament; and consultancies and retainers.  Other disclosures concern sponsorships; gifts and hospitality; benefits; travel discounts; land and property; and pensions.
Some MPs were, however, not happy that they are required to declare the financial interests of their spouses, children and other dependants and the extent that the member benefits from such, whether directly or indirectly, and that the member is aware of their registrable interest.  The public and the media will only have access to selected parts of the declaration of lawmakers. For instance, information regarding their family is kept in the confidential part of the register, unless a member at his or her own discretion decides otherwise. The entire baffling spectacle is looking more like a typical epitome of African politics, where power and influence are channels to wealth. The apparent race to accumulate wealth among politically connected networks over the past few years has cost the country billions. The sad part however, is the fact that money spent to procure public goods and services does not translate into an increase of employment opportunities or companies/tenderpreneurs graduating to fully-fledged business that are less dependent on government to survive. The State’s porous procurement system has been widely acknowledged in Government for some time, it eventually culminated in the establishment of the Public Procurement Board. As if willfully oblivious on how entrenched the interconnection between business and politics has become, Government’s procurement crackdowns appear to be focused on public servants rather than politicians. While some suggests that because politicians don’t actually adjudicate Government tenders as public servants do, they can’t influence who receives contracts, there are allegations that some have made use of proxies to make money under disguise.




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