By: Nghiinomenwa Erastus

The finance ministry has confirmed that as part of the infrastructure grants from the Chinese government, a Chinese contractor has to do the job under Namibia procurement rules.

There has been an outcry from the construction sector and many industry sympathisers that all the work-related tenders are just being awarded to Chinese emerging contractors at the expense of equally capable Namibian contractors.

The construction sector is also validated by its continuous negative growth for the past 23 quarters (since 2016). The sector only recorded a positive growth four times by September last year.

The Villager investigation team reached out to the finance minister Shiimi regarding Namibia loans and grants from China.

Shiimi confirmed to The Villager last week that a Chinese contractor is required in this grant arrangement.

Through the ministry spokesperson, Shiimi highlighted the projects that benefited from the Chinese grants, mainly for the construction of roads.

The ministry has also added that despite the grant requirements favouring Chinese contractors, the country’s procurement methods are employed in choosing the contractor from a group of Asian companies.

The treasurer, who is also responsible for economic growth and the country retains extra dollars from government expenditure, explained that apart from the machinery and skilled labour that Namibia does not have, the large material consumed in these types of projects is Namibian sourced. 

This includes bitumen from Okahandja, diesel, sand, and stone, and the requirement of a 20% Namibian-owned company participation.

The ministry was also asked how the country remains part of the grants beyond materials procurement. The contractors will repatriate their profits if they pay taxes on grant-induced work, especially the mega ones like the Hosea Kutako International Airport.

Shiimi said, “the Namibia tax law exempts tax on grants and donations”, thereby highlighting that the tax law is mum and does not apply to grant-funded projects.

However, he added that contractors working on Chinese-loan-funded projects pay taxes, as the country tax laws grant no exemption on loan funded projects.

As per the bilateral arrangement, the Namibian government has benefited from the Government of the People’s Republic of China, whereby China extended grants for development projects as set out in the National Development Plans (NDPs).

According to Shiimi, these grants are provided within bilateral arrangements between the two governments, amongst them:

  • Construction of the National Youth Centre
  • Upgrading of Windhoek Hosea Kutako Road to a dual carriage (23KM Doardabis Hosea Kutako)
  • Otjomuise Secondary School,
  • 200 Social housing in Gobabis and Grootfontein
  • N$200 million to construct four modern schools in Namibia’s rural constituencies

This also means that the five projects were exclusively for Chinese contractors as grants agreements stipulated.

Shiimi was also quizzed on what Namibia gave up in exchange for these grants. There have been news reports about China taking over critical assets after defaults from Djibouti, Sri Lanka, Uganda and Zambia.

The minister assured the public that “there were no exchanges done or recorded on these grants”.

“To date, no collateral or guarantee has been issued to any Chinese Financial Institution. All loans taken by the government of the Republic of Namibia were uncollateralised, and no security was required”.

The Construction Federation of Namibia has been quite vocal against the government’s policy of reserving and awarding tenders to Chinese companies.

The federation has been calling on the government to award tenders to local companies to sustain the sector and keep the dollar circulating in the economy.

The construction sector used to be one of the biggest employers and contributors to the economy before the 2016 collapse, coinciding with government expenditure reduction and Chinese contractors.

Moreover, the construction sector is one of the sectors with the biggest multipliers as an expenditure through the industry, causing changes in many other related economic sectors through consumption expenditure and investment expenditure.

However, local companies are eating flames when it comes to infrastructure tenders as some are sponsored by China and, as a result, reserved for Beijing emanating companies.

The local construction sector recorded another massive decline of 43,7% in the third quarter of 2021 compared to a reduction of 10% in the same period in 2020.

Reasons being government construction went down and the current capital projects being rolled out are heavily contestable, with the Asian contractors standing tall.

 In real terms, government expenditure on construction posted a 46,1% by the end of the third quarter last year (latest data) relative to 3,7% to 2020 thor d quarter.

Since 2016, the government has spent from N$200 million to N$1,2 billion to the end of September 2021. Email: erastus@thevillager.com.na