The Minister of Finance and Public Enterprises, Ipumbu Shiimi, has directed public entities not to enter into financial agreements that exempt lenders from the required tendering processes as stated in the Procurement Act.

This directive follows a local outcry regarding a road project funded by the German development agency, KfW Development Bank, that excluded local construction companies due to strict financial and technical pre-qualification requirements.

In a communication dated May this year, Shiimi stated that his ministry engaged with KfW regarding exemptions from the formal procurement process outlined in the Procurement Act for projects funded by the German Development Bank.

Following the consultations, they have agreed that only the current projects under the existing financing agreement will be granted such an exemption to use KfW procurement guidelines.

Any future financing agreements, particularly those not in line with the Procurement Act, will need to be reviewed by the Ministry of Finance on a case-by-case basis.

In December 2022, KfW Development Bank signed a N$2 billion funding agreement with the Ministry of Finance for the rehabilitation and development of roads and water infrastructure.

Under the KfW funding agreement, the tenders for these projects would follow KfW procurement guidelines instead of the rules set by the Procurement Board.

According to the Procurement Act, public entities such as the Roads Authority are only supposed to review and approve road work tenders that do not exceed N$30 million.

However, under the KfW exemption, they can handle projects internally above this threshold without involving the Procurement Board.

What provoked the Construction Industries Federation is what they call the exclusion of local companies through stringent technical and financial pre-qualification requirements for the 33-kilometre Karibib-Usakos road upgrade at a cost of just over N$370 million.