Still no joy for black Malawian contractors

Three years after the preferential treatment provision that compels procuring and disposing entities to award 60 percent of all contracts to indigenous black Malawian contractors became law, the local Malawians are yet to benefit

The preferential treatment provision is provided for under Section 44 (10) of the Public Procurement and Disposal of Assets Authority (PPDA) Act, and compels procuring and disposing entities to award 60 percent of all contracts under the National Competitive Bidding to indigenous black Malawians and the remaining 40 percent to others.

But it has emerged that government has not promulgated the enabling regulations to operationalise and offer guidance on the process of implementing the provision.

On the other hand, the provision is facing resistance from some quarters who argue that the regulations are discriminatory and unconstitutional.

Indigenous Businesses Association of Malawi (IBAM) president Mike Mlombwa said, in a telephone interview, that not much has changed and foreigners still dominate awards of public sector contracts in the country.

He dismissed as unfounded a claim by PPDA spokesperson Kate Kujaliwa who said there were “promising” trends in current data in the awarding of 60 percent of all contracts under National Competitive Bidding to indigenous black Malawians.

Kujaliwa was responding to a Weekend Nation inquiry on concerns that some Malawians are still not benefiting from public procurements despite the law providing for preferential treatment of local bidders.

She indicated, in a written response, that PPDA’s current data based on the submission for the procurement falling under No Objection, as well as the quarterly report, was promising. But she did not give figures or percentages to demonstrate how much indigenous black Malawians are benefiting from the public procurement,

In a telephone interview on Wednesday, Mlombwa pointed out that government is good at coming up with laws but has a challenge  enforcing them.

He said: “Our members are still complaining that they are unable to get contracts from government and it is not a secret that foreigners are getting the biggest stake. In other countries, nationals also benefit by acquiring shares in companies owned by foreigners, but that is not the case here.”

Commenting on the issue, Indigenous Black Business Northern Region Chapter chairperson Elizabeth Nkhwazi said there were some improvements at the beginning, but now there’s a relapse due to lack of monitoring and enforcement.

She said: “It seems no one is making any follow ups as to whether indeed indigenous Malawians are getting 60 percent of the contracts. Most procuring entities have gone back to awarding contracts to non-indigenous companies and they are getting away with it.”

However, Kujaliwa explained that on several occasions the authority has referred back submissions by procuring disposal entities (PDEs) which have not applied the preferential treatment.

She said: “PDEs are required to submit quarterly reports from which the Authority checks if the PDEs are complying. Where compliance is lacking, the PDEs are advised and where a submission has been made for No Objection, an approval could be withheld for not applying the preference.”

Kujaliwa did not name the procuring entities that have been contravening the law or the number of public procuring offices that have not been complying with the PPDA Act.

She said: “The procuring entities are expected to monitorpromotion of indigenous black Malawians since it is their obligation to implement the provision as the authority plays its oversight role.” their performance in relation to

Kujaliwa said PPDA issued a circular that: “All indigenous black Malawians shall enjoy a margin of preference of up to 20 percent in all procurements carried out using National Competitive Bidding or Request for Quotation method (RFQ). This is provided that such procurements are determined to be of low complexity.”

The circular adds that the authority will continue to conduct Post Procurement Reviews on procuring entities and that those found fronting indigenous black Malawians risk being barred from supplying to public institutions for a specific period.

The PPDA drafted the Public Procurement and Disposal of Assets Authority (on Administration of Preferential Treatment) Regulations in 2020.

Kujaliwa said that after further consultations with different stakeholders, there are some areas in the regulations that required to be refined.

In a letter dated September 3 2020 addressed to PPDA, human rights activist the late Rafiq Hajat said no one in Malawi can claim “to be ‘indigenous’ in the strict sense”, adding that the word is now being used interchangeably with ‘black’ to advance ethnocentric agendas.

In another letter dated September 3 2020, also addressed to PPDA, other concerned citizens— Robert Jamieson, Krishna Achutan, Keshia Osman-Meyer, Michael Antoine and Carver Bhima—said the regulations discriminate against anyone who does not appear to be either indigenous or black enough to participate in business on an equal footing.

Under the PPDA Participation by Micro, Small and Medium Enterprise Order 2020, the small and medium enterprise to benefit from the provision are those businesses with at least annual turnover of between K50 million and K500 million, that have between 20 and 99 employees or maximum assets, excluding land and buildings in the case of manufacturing enterprises, of K250 million.