Govt threatens to cancel Ifmis contract

 Five years after awarding a $13.8 million (about K14.1 billion) Integrated Financial Management Information System (Ifmis) procurement contract to a Zimbabwean firm, government has written the contractor threatening to cancel it.

A letter from the Accountant General Henry Mphasa to the contractor Third Century Systems Private Limited (TTCS), which Nation on Sunday has seen, claims that Ifmis is performing poorly; hence, threatens Malawi’s chance to access the Extended Credit Facility (ECF) with the International Monetary Fund (IMF).

The letter dated May 30 2023 states that implementation of the new Ifmis is part of structural benchmarks and prior actions government must undertake for the success of the ECF negotiations with the IMF and resumption of donor support.

Reads part of the letter: “As you are aware, we are at a critical stage of project implementation as well as undertaking negotiations with development partners citing the Extended Credit Facility with the IMF and direct budgetary support with the World Bank as examples.

“At a higher level, implementation of the Ifmis contract module, commitment-based control allotments as well as production of Ifmis reports from reconciled figures, and the need to implement an interface between the Human Resource Management Information System and SAP Ifmis to root out manual intervention in payroll processing, all which are outstanding, are key in that regard.”

Mphasa has since warned TTCS that the contract will be terminated by end of September 2023 if various factors leading to poor performance of the new Ifmis are not addressed.

The $13.8 million (about K14.1 billion at current exchange rate) Ifmis procurement contract was awarded in 2018 to a third ranked bidder for a tender process that took place in 2015, something that created controversy at the time.

Ifmis, the government’s electronic payment platform, was rolled out after the Malawi Government committed to do away with its old version that was prone to abuse exposed during Cashgate in 2013, the plunder of public resources at Capital Hill.

This later compelled Malawi’s development partners to pull out their support. The new Ifmis is, therefore, part of Malawi’s development partners’ recommendations to build trust in public finance management, but that ideal is now far-fetched.

The letter to the contractor expresses concern that the new Ifmis is failing to fully perform automatic bank reconciliations as there are outstanding configurations to be resolved.

Besides, Mphasa, in the letter also expresses worry that the new system is failing to produce the much-needed financial reports and that the system’s disaster recovery centre is yet to be commissioned.

Compounding the matter is the absence of consultants who indefinitely withdrew their labour since December 2022 due to the company’s failure to pay them their salaries and allowances.

According to the letter, the company informed the Malawi Government that it is facing a financial liquidity squeeze to keep the Ifmis project running.

However, as per the contract, the Accountant General has stressed that this is one of the many grounds for contract termination despite that they have been professionally engaging and resolving these issues.

While pointing out that the system handover is yet to happen, the Accountant General’s office has also expressed frustration that implementation of the remaining modules and those that were partially implemented have missed a target of April 1 2023 to fully go live.

“I, therefore, write to strongly warn you to deliver all activities, milestones and expectations of the project by the end of September 2023 failing which the Government of Malawi will initiate contract termination.

“It is also my expectation that consultants will remain on the ground physically throughout the remaining period to diligently pursue project activities for conclusion. This is my final warning and I remain available for further engagements on this matter,” further reads the letter.

Mphasa could not be reached for comment on numerous occasions, but Treasury spokesperson Taurai Banda in an interview on Saturday said despite the warning, the government wants to see the contract run to its logical conclusion.

He said: “As articulated, government observed challenges with TTCS in regards to their capacity to deliver based on the requirements of the contract.

“To add on, these challenges ultimately have led to delays in executions of certain critical elements of the contract.”

 Banda further added that as government, they want TTCS to better understand their position so that the debacle may be resolved amicably.

TTCS project manager for Ifmis Clement Matowanyika declined to comment while acting country director Cleopas Manyika did not respond to our questionnaire sent via his WhatsApp Zimbabwean number.

This is despite an indication that our message was received and read.

But Public Accounts Committee of Parliament chairperson Mark Botomani in an interview on Wednesday expressed concern over the matter.

He said the matter is a cause for worry considering the money spent on procurement, maintenance and training of users.

He said: “PAC will in due course engage the Accountant General in order to get to the root of this matter. The committee would like to understand how long it has taken the government to realise that the said company is giving us a raw deal.”

Botoman further said PAC also wants to understand if delays in transactions such as salaries and other obligatory payments in ministries, departments and agencies (MDAs) are a result of the Ifmis poor performance.

He said PAC wants to take the Accountant General to task to understand how much the country lost due to insufficient supply of some components to the new Ifmis.

TTCS was the second highest bidder at $13.8 million while the highest bidder was KPMG at $47.9 million and the least bidder was British based TBL Systems at $6.6 million.

Award of the contract to the company raised eyebrows at the time with the then Budget and Finance Committee of Parliament chairperson Rhyno Chiphiko questioning the decision.

As of February 2023, 1 600 end users were trained while 99 percent of the Ifmis project core team attended first level training to build their own capacity to ensure long term sustainability of the system.

But the system has missed its deadline of April 1 2023 for full implementation and operationalisation of some components.