Windhoek- 90 contracts awarded to Namibians
11 contracts awarded to foreigners
377 construction companies
60% of Namibian companies rely
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.
Namibian companies, which are primarily awarded these contracts as part of the government’s empowerment drive, receive one-off fee payments from foreign companies subcontracted for the work, which essentially means they are bought out of the contracts.
However, such transactions are concluded without approval of the Ministry of Works and Transport, or the Tender Board, revealed works minister Alpheus !Naruseb.
!Naruseb, who made the revelation in parliament this week, said such arrangements are common but regrettably fail to strengthen local construction capacity as the money earned by the Namibian entity is not reinvested in the construction industry.
“What is worrisome to this ministry is that out of 84 percent [of contracts] awarded to Namibians, a significant number of these are 100 percent subcontracted out informally to foreign-owned companies without the knowledge of the Ministry of Works and Transport or the Tender Board,” said !Naruseb.
These arrangements are illegally entered into between Namibians who have been awarded contracts by the Tender Board and foreign companies. After the one-off fee has been paid to the Namibian company the work is done by the foreign-owned entity.
!Naruseb was speaking on Tuesday during a debate in the National Assembly, where he gave an overview of the state of the Namibian construction industry. He was responding to United People’s Movement (UPM) MP Jan van Wyk’s allegations regarding the impact of Chinese involvement in the Namibian construction industry.
He said the issue is similar to most joint venture arrangements that are 51 percent owned by Namibians and 49 percent by foreign nationals.
!Naruseb said the ministry is busy reviewing its strategies to ensure the noble objectives of equitable profit sharing, transfer of skills and knowledge to Namibians, capacity building and employment creation, which government wants to foster through joint ventures, are attained.
!Naruseb added that it was incorrect for Van Wyk to claim that the works ministry was awarding all tenders to companies owned by foreign nationals because statistics show the majority of government construction tenders have been awarded to Namibians.
He said data for the past three financial years, from April 2014 to the current year, indicate that a total of 108 building construction projects were awarded through the Tender Board, with an overall value of N$4.2 billion.
!Naruseb said of these building construction projects 90 contracts were awarded to 100 percent Namibian contractors, while seven were awarded to joint ventures between foreign contractors and Namibian contractors. He added that 11 contracts were awarded to foreign contractors.
He said he would like to see further improvement in the allocation of construction tenders to benefit more Namibian contractors.
“We appreciate that the only way to sustain the economic growth that the industry has enjoyed in the last few years is by guaranteeing majority participation by Namibian-owned companies in the construction industry. Companies owned by Namibians employ Namibians and contribute to government revenue through payment of tax,” the minister said.
Minister of Labour, Industrial Relations and Employment Creation Erkki Nghimtina, in his contribution to the debate, said Van Wyk incorrectly claimed the government turns a blind eye to labour issues in the construction industry. Nghimtina said investigations of the construction industry have revealed that many construction companies, including from China, Germany, South Africa as well as Namibia, do not comply with labour and employment laws, whereas others do comply. He added that inspections at 377 construction companies showed that 232 had poor compliance. Only 56 had good compliance, while 99 had average compliance.
“Government’s approach to enforcement of labour and employment laws is not premised on the national origins, ethnicity or colour of the employer, but on whether the enterprise is covered by the Labour Act, 2007, as an employer and whether the employer has failed to comply with the law,” the labour minister told parliament.
With regard to Chinese construction companies, !Naruseb said action has been taken against those found to operate beyond the scope of the law. He cited as an example a company that was ordered to cease construction of the police headquarters until it remedied labour violations, among others, found at the site.