CPBN admits mistake in condom supply... never checked Shapwa factory

Namibia’s Central Procurement Board has shockingly admitted to making a mistake in a multi-million dollar tender.

The admission is that they failed to do due diligence to confirm whether local businessman Shapwa Kanyama owns an operational condom or surgical glove factory.

In a presentation to the Parliamentary Standing Committee on Economy and Public Administration on Wednesday, CPBN chairman Amon Ngavetene said it was a learning experience for the council not to rely solely on documents or hearsay but to go to the field to verify for itself before awarding contracts.

The company in the spotlight is Amnics Trading, owned by Kanyama.

The CPBN board also admitted that it relied solely on the documents submitted by Kanyama but never verified the information contained therein. This means that CPBN awarded the company a N$650 million medical supplies tender without any physical verification of operational capacity.

Kanyama’s subsidiary Amnics Trading managed to beat other bidders, some of whom offered more affordable offers, on the grounds that it is a “local manufacturer”.

“We relied on the documentary evidence we had, and we didn’t go directly to the factory to see if this was really happening or not. And I think that on that basis, we recognized that there was a gap there,” Ngavetene admitted, as MPs looked on visibly shocked.

Drawing on Kanyama’s experience, Ngavetene said this week that CPBN has entered a new phase in due diligence.

Sales offers

Meanwhile, CPBN highlighted another challenge: Namibians selling tenders to foreign entities and individuals. Ngavetene said the commission had processed 193 awarded procurement contracts: 177 were awarded to Namibians, only 11 to foreign companies and five to joint ventures.

“What we are looking for is mainly between Namibian companies and Chinese joint ventures. It is all done with the aim of getting the tender, and the Namibian gets paid and then the Chinese go into the project. Obviously, leaving the Namibians in the same situation means that you don’t have the skills; you don’t have the knowledge, and so on. And the reasons why we are promoting JVs is the transfer of skills and experience. But I think that is obviously going to be defeated,” he stressed.

Nico Smit, a committee member and MP for the People’s Democratic Movement, lobbied the CPBN, saying that tenders should be fair and that the council manages most of the money intended for the country’s development.

His strong position is that the CPBN should allocate most of this money to Namibians, not foreigners.

He stressed that only those who are capable of doing the job should be given contracts.

“We need to keep the money in the country and get rid of foreigners. We can only develop our people and our country if we keep this money in the country,” Smit said. He added that local entrepreneurs should help the government address socio-economic challenges.

“Unfortunately, the culture in the country at the moment is one of consumption,” Smit said, adding that “some of the colleagues who receive tenders take that money and go and buy luxury cars, without worrying about helping the government address the challenges. The little profit you make should be reinvested in business to create more value, create jobs and create sustainable businesses.

Share the cake

On the same occasion, Maximalliant Katjimune, PDM MP, said that local entities, especially SMEs, faced certain obstacles when it came to responding to calls for tenders.

In a recent motion tabled in Parliament, he called on the House to study the barriers surrounding SME financing in Namibia to unlock greater access and economic potential for this critical sector of the economy.

Katjimune recommended a fundamental reform of procurement policy to reduce the cost of tendering and make the process more accessible.

He also advised the committee to consider splitting tenders into smaller contracts to allow smaller companies to compete and provide greater participation and better benefits in the tender process.

“More often than not, we see a company run by two people being awarded a tender of N$600 million. Is it not perhaps better if the tender process and contracts are such that the contract is divided into smaller amounts and awarded to many companies so that it benefits a much wider pool of MSMEs than just one individual in a company?” the PDM lawmaker questioned.

He said that about 70 per cent of small and medium enterprises would go bankrupt almost immediately after commencing operations. This is a worrying statistic that requires prompt intervention, he continued. Namibia today has about 70,000 registered micro, small and medium enterprises in various sectors.

The sector represents around 12% of the gross domestic product and employs more than 200,000 people.

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