Local businesses slam 'exclusion' as SOEs secure govt contracts

Private Namibian businesses have raised concerns over what they believe is a gradual displacement from government contracts by public enterprises.

This follows an announcement that the state is considering awarding a national school feeding catering tender to the Namibia Training Authority (NTA).

Education ministry executive director Erastus Haitengela said no decision has yet been taken.

"The ministry is currently undertaking internal consultations and engaging with a number of potential service providers, including NTA and other public entities," he confirmed this week.

The development is the latest in a series of instances where state-owned entities have entered sectors traditionally served by private Namibian companies.

Examples include the Roads Contractor Company’s (RCC) involvement in a N$140 million sports facilities rollout, August 26's long-standing allocation of major government projects, and NamPost's appointment last year to distribute social grants, ending Epupa Investment's role after more than a decade.

Epupa had managed the service since 2011 through a series of renewals and extensions, processing more than N$15 billion in social grant payments and serving over 237 000 beneficiaries.

Government said the transition to NamPost would save taxpayers approximately N$58 million.

More recently, Cabinet appointed the Social Security Commission (SSC) to assume responsibility for the management and administration of Namibia's N$3.9 billion Public Service Medical Aid Scheme (Psemas).

Government has also increasingly moved to bypass procurement intermediaries, particularly in the health sector. Spearheaded by President Netumbo Nandi-Ndaitwah and health minister Dr Esperance Luvindao, the approach seeks to eliminate excessive mark-ups and ensure a more reliable supply of medicines.

Speaking to Namibian Sun in March, Nandi-Ndaitwah cautioned that inflated prices charged by intermediaries undermine public spending and delay critical national projects.

"We are not against middlemen," she said. "But they must be realistic."

'Distorting competition'

The Namibia Local Businesses Association (Naloba) has criticised the allocation of major projects to state-owned enterprises, arguing that the practice deprives local businesses of opportunities, distorts competition and concentrates public resources in the hands of a few state entities.

According to the association, the model effectively sidelines private enterprises and has, in some cases, allegedly turned state-owned companies into conduits through which contracts are subsequently awarded to foreign firms.

Naloba vice president Peter Kanu Amadhila told Namibian Sun this week that the approach has a negative impact on local businesses and, by extension, the national economy.

"Directly allocating work to an entity, except in cases where an emergency has been declared, constitutes corruption, and that is exactly what is happening. Overpricing of projects is taking place to create brown envelopes," he alleged.

He warned that continued direct allocation of projects to state-owned enterprises would worsen poverty and lead to further retrenchments within the local business sector.

"If this trend continues, poverty will increase and retrenchments among local enterprises will continue. To level the playing field, all government projects should go through competitive bidding processes. If state-owned enterprises wish to bid, they should be free to do so," he said.

Call for open competition

In a letter dated 11 May and addressed to the president, Camelot Investments Group owner Jurius Nkoshi expressed concern that significant public projects and government functions appear to be shifting towards public enterprises and statutory bodies, potentially limiting meaningful participation by local private companies.

Nkoshi argued that public expenditure should be used to broaden economic participation, create jobs and strengthen domestic business capacity, particularly at a time when unemployment remains high.

He further contended that public entities should not become the default recipients of government projects outside their core mandates and called for major projects and service contracts to be openly advertised unless a lawful exemption applies.

"Camelot Investments Group and many other Namibian business owners are not seeking special favours. We seek only a fair, transparent and lawful opportunity to compete, contribute and grow," he wrote.

Presidential spokesperson Jonas Mbambo said he had not yet seen the correspondence, adding that he would consult the Presidency's executive director regarding the matter.

Five Star Investment owner Lukas Nakatana echoed Nkoshi's concerns, saying local businesses require access to public contracts if they are to grow beyond the small and medium enterprise category.

"We cannot remain SMEs forever," Nakatana said. "We need to graduate from small and medium enterprises into large businesses, but we require government support to do so".

He argued that government procurement should be deliberately leveraged to help local companies build capacity, invest in equipment and create jobs.

Nakatana also raised concerns about delayed payments to contractors, noting that businesses are expected to pay workers and suppliers while waiting for government invoices to be settled.

According to him, some contractors have been awaiting payment since the end of the previous financial year.