Construction takes plight to MPs
24 November 2020 | Business
The Construction Industries Federation of Namibia (CIF) recently hosted a series of five business breakfast briefings for members of parliament (MPs). In total, 45 members of both the Nation Assembly and the National Council attended the briefing sessions, where they were also able to engage with members of the CIF.
The breakfast meetings were sponsored by the Hanns-Seidel-Foundation (HSF).
The foundation’s mandate is generally to support democratic development, good governance and economic development.
The purpose of the breakfast briefing was that the employers’ federation, which represents some 260 businesses in the construction sector, was able to inform the politicians of the dire state of the Namibian construction sector. Since 2016, many businesses in this sector have either downsized drastically, closed down or indeed were liquidated.
About 50% of employees in the sector had lost their jobs as a result of that. The construction sector, which once was a main sector contributing to the Namibian economy - with a contribution of 7.2% to GPD in 2016 - has seen a continuous contraction of 12% since.
Bärbel Kirchner, consulting general manager of the CIF says: “The biggest frustration that the industry faces is that local contractors, of any size, are excluded from some of the main projects, and that is simply due to the financial qualification criteria on some of the projects and the terms negotiated by government where donor or loan financing comes into play.”
PROPOSED SOLUTIONS
Engaging the MPs, the CIF proposed various solutions.
One that could be implemented with immediate effect would be regulations that can be activated by finance minister Iipumbu Shiimi under the current Procurement Act. This would ensure that projects of a certain size would be set aside for 100% Namibian-owned companies only.
At the same time, the CIF is hopeful that the bill for a Namibian Planning and Construction Council would be tabled soon in parliament once it has been reviewed by cabinet.
“We have engaged on several occasions with the line ministry with regard to the regulation of our industry, which can be achieved through the establishment of a council. In October 2020, we had another meeting with the minister of works and transport, John Mutorwa, where any potential final differences between key stakeholders - the CIF and the Metal and Allied Namibian Workers Union (MANWU) - had been ironed out. We were told that the bill was now ready to be submitted and for review by cabinet,” says Kirchner.
Other proposed solutions were closed bids for large contracts involving Namibian contractors only, labour-based projects, local joint ventures and consortia, and reducing the size of projects as that would mean that more companies could participate and would meet the financial prequalification requirements.
WELL ATTENDED
The breakfast sessions were well attended from across the political spectrum of current MPs. This included many representatives of the ruling party, but also the leaders of almost all opposition parties with seats in National Assembly and the National Council.
“We are delighted that our breakfasts briefing sessions were so well attended and that there appears to be a sincere interest in finding solutions that would ensure the revival of our sector. We are confident that we will be able to continue to engage; also with the newly elected councillors early in 2021,” Kirchner says.
Following presentations given by the CIF vice president, Panashe Daringo, and Kirchner, lively discussions took place, which led to further insight and understanding of key issues that faced the industry.
There seemed to have been a common understanding amongst the members of parliament that had attended the briefing sessions, irrespective of political orientation.
Most were of the opinion that indeed the industry needed to be regulated and that they looked forward to when the laymen’s draft of the Namibian Planning and Construction Council was tabled in Parliament. With regard to the proposed council, it should be inclusive and ensure empowerment in the industry.
Many were equally concerned about the extensive engagement of foreign companies and commented that something needed to be done about that, as well as about the involvement of tenderpreneurs, poor quality workmanship and the non-completion of projects.
FOREIGN CONTRACTORS
Talking about the large-scale involvement of foreign contractors in the construction sector, a member of parliament said that “one might not be privy to the information about what Namibia is owing the Chinese, but it was really a concern ... since as Namibian, one was exposed to family members that were losing jobs on a daily basis and it was therefore important that one is moving away from the current trend”.
Another commented about the time when a N$15-million Namibia project was awarded to someone that had no track-record in the industry, which led to the non-completion of the project, which meant that it could not be used for its intended purpose. She therefore felt that it was important that one take action and ensure greater regulation in the industry.
Another MP said that that one needed to look at the impact of tenders given to foreign contractors, as the money that is being spent by government was not stimulating the local economy. She referred to the African Development Bank (AfDB) and that one was dealing with the procurement rules of the AfDB, which were aligned with those of the International Monetary Fund (IMF).
The Namibian procurement legislation had also not been conducive, as somehow it was also created to fit in with international standards. She stated that as Namibians one needed to fight for one’s own and that therefore the council could play the role to manage the conflict between "us and others”.
She referred to "the issue of the Chinese", which she regarded as a thorn.
When it comes to procurement, Chinese businesses go into joint ventures with Namibians. However, when the Namibian counterpart gets the contract, they are be bought out of the contract, even though one got the impression that Namibians were awarded the contracts in joint venture with Chinese companies, when in reality they were not involved.
One MP warned the CIF that if they did not speak up, its members would be crowded out and “that the state was becoming more and more the bigger player similar to the Chinese economic management system.”
Essentially, with the involvement of the Road Contractors Company (RCC) and their foreign joint venture partners, as well as August 26, government was becoming a competitor to businesses in the private sector that had the full capacity to do the requisite jobs. He also challenged the CIF to expressively state that local companies were competing against Chinese companies.
CORRUPTION
One MP challenged the CIF to address corruption. The federation needs to address corruption in procurement head-on, as it has brought the industry down.
He also said that with regard to partnerships with Chinese companies, a Namibian company would stand as a front. The local company would get N$20-million in the pocket and then the Chinese contractor would take over.
Another MP mentioned that he felt that the laymen's draft was a very important piece of legislation. He felt that the establishment of a council was overdue. He also mentioned that one wondered why it took so long.
He was however not surprised, as he felt that the construction sector had become a breeding ground for corruption. According to him, that might have been the reason why it had taken such a long time for the piece of legislation to go to parliament.
Another MP said that she believed that the council would have the potential to regulate the industry. She felt that it would minimise or indeed eliminate all the factors that were currently hampering the industry.
UNION
Justina Jonas-Emvula, the secretary general of MANWU, said the current developments were at a disadvantage to the Namibian employers and to the Namibian workers. Therefore it is essential that the Namibian Construction Council is established so that one could localise the industry.
She said despite there being a reduction in government spending, there were capital projects. However, the question was who these projects were given to. These were given to foreign contractors, and these foreign contractors were not helping the local contractors either.
Jonas-Emvula referred to the issue of the AfDB (where local contractors were excluded due to steep financial requirements) and considered it as ''very painful, very painful".
She mentioned a school being constructed by a Chinese company in Epukiro – a job that could have been done by a local contractor. She encouraged the councillors to support the establishment of a construction council once tabled in parliament, as it would support Namibians as a country. The economy can only be boosted if one were to empower one's own people.
Most members of parliament were very appreciative of the initiative and said that they would encourage further deliberations, information sharing and that the bill that would lead to the establishment of the Namibian Planning and Construction Council would be tabled. - Construction Industries Federation of Namibia
The breakfast meetings were sponsored by the Hanns-Seidel-Foundation (HSF).
The foundation’s mandate is generally to support democratic development, good governance and economic development.
The purpose of the breakfast briefing was that the employers’ federation, which represents some 260 businesses in the construction sector, was able to inform the politicians of the dire state of the Namibian construction sector. Since 2016, many businesses in this sector have either downsized drastically, closed down or indeed were liquidated.
About 50% of employees in the sector had lost their jobs as a result of that. The construction sector, which once was a main sector contributing to the Namibian economy - with a contribution of 7.2% to GPD in 2016 - has seen a continuous contraction of 12% since.
Bärbel Kirchner, consulting general manager of the CIF says: “The biggest frustration that the industry faces is that local contractors, of any size, are excluded from some of the main projects, and that is simply due to the financial qualification criteria on some of the projects and the terms negotiated by government where donor or loan financing comes into play.”
PROPOSED SOLUTIONS
Engaging the MPs, the CIF proposed various solutions.
One that could be implemented with immediate effect would be regulations that can be activated by finance minister Iipumbu Shiimi under the current Procurement Act. This would ensure that projects of a certain size would be set aside for 100% Namibian-owned companies only.
At the same time, the CIF is hopeful that the bill for a Namibian Planning and Construction Council would be tabled soon in parliament once it has been reviewed by cabinet.
“We have engaged on several occasions with the line ministry with regard to the regulation of our industry, which can be achieved through the establishment of a council. In October 2020, we had another meeting with the minister of works and transport, John Mutorwa, where any potential final differences between key stakeholders - the CIF and the Metal and Allied Namibian Workers Union (MANWU) - had been ironed out. We were told that the bill was now ready to be submitted and for review by cabinet,” says Kirchner.
Other proposed solutions were closed bids for large contracts involving Namibian contractors only, labour-based projects, local joint ventures and consortia, and reducing the size of projects as that would mean that more companies could participate and would meet the financial prequalification requirements.
WELL ATTENDED
The breakfast sessions were well attended from across the political spectrum of current MPs. This included many representatives of the ruling party, but also the leaders of almost all opposition parties with seats in National Assembly and the National Council.
“We are delighted that our breakfasts briefing sessions were so well attended and that there appears to be a sincere interest in finding solutions that would ensure the revival of our sector. We are confident that we will be able to continue to engage; also with the newly elected councillors early in 2021,” Kirchner says.
Following presentations given by the CIF vice president, Panashe Daringo, and Kirchner, lively discussions took place, which led to further insight and understanding of key issues that faced the industry.
There seemed to have been a common understanding amongst the members of parliament that had attended the briefing sessions, irrespective of political orientation.
Most were of the opinion that indeed the industry needed to be regulated and that they looked forward to when the laymen’s draft of the Namibian Planning and Construction Council was tabled in Parliament. With regard to the proposed council, it should be inclusive and ensure empowerment in the industry.
Many were equally concerned about the extensive engagement of foreign companies and commented that something needed to be done about that, as well as about the involvement of tenderpreneurs, poor quality workmanship and the non-completion of projects.
FOREIGN CONTRACTORS
Talking about the large-scale involvement of foreign contractors in the construction sector, a member of parliament said that “one might not be privy to the information about what Namibia is owing the Chinese, but it was really a concern ... since as Namibian, one was exposed to family members that were losing jobs on a daily basis and it was therefore important that one is moving away from the current trend”.
Another commented about the time when a N$15-million Namibia project was awarded to someone that had no track-record in the industry, which led to the non-completion of the project, which meant that it could not be used for its intended purpose. She therefore felt that it was important that one take action and ensure greater regulation in the industry.
Another MP said that that one needed to look at the impact of tenders given to foreign contractors, as the money that is being spent by government was not stimulating the local economy. She referred to the African Development Bank (AfDB) and that one was dealing with the procurement rules of the AfDB, which were aligned with those of the International Monetary Fund (IMF).
The Namibian procurement legislation had also not been conducive, as somehow it was also created to fit in with international standards. She stated that as Namibians one needed to fight for one’s own and that therefore the council could play the role to manage the conflict between "us and others”.
She referred to "the issue of the Chinese", which she regarded as a thorn.
When it comes to procurement, Chinese businesses go into joint ventures with Namibians. However, when the Namibian counterpart gets the contract, they are be bought out of the contract, even though one got the impression that Namibians were awarded the contracts in joint venture with Chinese companies, when in reality they were not involved.
One MP warned the CIF that if they did not speak up, its members would be crowded out and “that the state was becoming more and more the bigger player similar to the Chinese economic management system.”
Essentially, with the involvement of the Road Contractors Company (RCC) and their foreign joint venture partners, as well as August 26, government was becoming a competitor to businesses in the private sector that had the full capacity to do the requisite jobs. He also challenged the CIF to expressively state that local companies were competing against Chinese companies.
CORRUPTION
One MP challenged the CIF to address corruption. The federation needs to address corruption in procurement head-on, as it has brought the industry down.
He also said that with regard to partnerships with Chinese companies, a Namibian company would stand as a front. The local company would get N$20-million in the pocket and then the Chinese contractor would take over.
Another MP mentioned that he felt that the laymen's draft was a very important piece of legislation. He felt that the establishment of a council was overdue. He also mentioned that one wondered why it took so long.
He was however not surprised, as he felt that the construction sector had become a breeding ground for corruption. According to him, that might have been the reason why it had taken such a long time for the piece of legislation to go to parliament.
Another MP said that she believed that the council would have the potential to regulate the industry. She felt that it would minimise or indeed eliminate all the factors that were currently hampering the industry.
UNION
Justina Jonas-Emvula, the secretary general of MANWU, said the current developments were at a disadvantage to the Namibian employers and to the Namibian workers. Therefore it is essential that the Namibian Construction Council is established so that one could localise the industry.
She said despite there being a reduction in government spending, there were capital projects. However, the question was who these projects were given to. These were given to foreign contractors, and these foreign contractors were not helping the local contractors either.
Jonas-Emvula referred to the issue of the AfDB (where local contractors were excluded due to steep financial requirements) and considered it as ''very painful, very painful".
She mentioned a school being constructed by a Chinese company in Epukiro – a job that could have been done by a local contractor. She encouraged the councillors to support the establishment of a construction council once tabled in parliament, as it would support Namibians as a country. The economy can only be boosted if one were to empower one's own people.
Most members of parliament were very appreciative of the initiative and said that they would encourage further deliberations, information sharing and that the bill that would lead to the establishment of the Namibian Planning and Construction Council would be tabled. - Construction Industries Federation of Namibia
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