15 Mar 2017 16:50pm
WINDHOEK, 15 MAR (NAMPA) A large number of tenders awarded to Namibians are subcontracted to foreign-owned companies without the knowledge of the Ministry of Works and Transport or the Tender Board.
These arrangements, which constitute about 84 per cent, are entered into illegally between Namibians who have been awarded Government contracts by the Tender Board and foreign companies, said Works and Transport Minister Alpheus !Naruseb when he contributed to the debate in the National Assembly Tuesday on the impact of Chinese involvement in the Namibian construction industry.
The motion was tabled by the Workers Revolutionary Party Member of Parliament, Jan van Wyk two weeks ago.
This is usually done as a once-off fee paid to the owners of the Namibian entity. Thereafter the contract and the work is done by the foreign-owned entity, the minister said.
He said these arrangements are common and they regrettably fail to strengthen local construction capacity, as the money earned by the Namibian entity is not reinvested in the construction industry.
!Naruseb said the case is similar to most joint venture arrangements, which according to him are owned 51 per cent by Namibians and 49 per cent by foreign nationals.
On the state of the Namibian construction industry, !Naruseb said a survey conducted by the Construction Industry Federation between 25 November and 01 December 2016 indicated that more than 70 per cent of companies rely on Government projects.
As of December 2016, Government owed contractors more than N.dollars 1 billion due to late payments because of national budget cuts.
As a result, indications are that close to 75 per cent of businesses are currently experiencing cash flow problems.
!Naruseb said 1 008 employees of 115 companies were retrenched between 01 September and 30 November 2016.
The minister said data for the past three financial years from April 2014 show that 108 building construction projects were awarded through the Tender Board with a total value of N.dollars 4 billion.
Of these building construction projects, 90 were awarded to 100 per cent Namibian contractors to the value of N.dollars 2 billion.
Seven of them were awarded to joint ventures between foreign contractors and Namibian contractors valued at N.dollars 1 billion, while 11 of the construction project were awarded to foreign contractors valued at close to N.dollars 1 billion.
The minister said while Government will continue to provide its support to the industry, it must also diversify and find alternative sources of income in order to survive.
Reliance on Government contracts alone is unsustainable in the long term, he highlighted.