The Institute for Public Policy Research (IPPR) says procurement regulations released in early August increase the risks of political pressure, patronage and collusion in public procurement.
The regulations, gazetted on 4 August, increase the threshold for discretionary spending.
This means that public entities can run procurement for more expensive projects without going through the Central Procurement Board of Namibia.
Presenting a new report yesterday, IPPR research associate Frederico Links said the new regulations also created a new category of high-value public entities.
“High-value entities, [like state petroleum company] National Petroleum Corporation of Namibia, can now contract for works projects worth up to N$500 million. That’s an immense jump,” Links said.
He said the changes increase corruption risks considerably, given that public procurement is already “marked by a lack of transparency, rampant non-compliance, poor governance and weak oversight”.
The new regulations also revealed a hundred public entities that run their own procurement.
The list of public entities running in-house procurement expanded to 260 from 176 in recent years. It includes companies like August 26 Holding Company and its subsidiaries.
“If you look at how these companies have been operating, they should have been on this list [before]. If these were public entities that had a procurement function, why were they not on the list? Was there a parallel procurement system in which they were operating?” Links said.
“That these commercial entities now appear on the list of regulated procuring entities suggests that they have conducted their procurement in the shadows up till now,” the report says.
In the past 10 years, August 26 has never submitted a public procurement plan. Halfway through this financial year, only 32% of public procuring entities have submitted their annual plans to the Procurement Policy Unit (PPU).
Links said the procurement regulations “speak to a political reality” in which the government is hoping to fast-track projects by giving individual agencies power over procurement.
“The corruption risks are elevated at present because of an executive urgency to implement ruling party election commitments from 2024,” Links says in the report.
The Ministry of Finance told The Namibian that the 2022 amendment to the Public Procurement Act expanded the definition of a public entity to include subsidiaries.
The ministry, therefore, added subsidiaries, as well as entities “that had been omitted from the original regulations” to the new list.
“The increase in the number of listed entities does not represent the creation of new procuring bodies solely for procurement purposes,” ministry spokesperson Wilson Shikoto said on Thursday.
Prior to being added to the list, there were several entities that had been applying the act despite not being on the list.
“At the same time, there were entities that qualified as public entities in terms of the act but were not applying the act,” Shikoto said.
Adding those entities to the gazetted list will facilitate compliance monitoring, he said.
He also said that the new ‘high-value entities’ were all identified as having the institutional, procurement and governance capacity to run higher-value procurements.
Their procurement will be monitored through reports to the PPU when contracts are awarded and regular auditing of contracts.
