Theft of Public Money via Construction Contracts – Malawi

Nyasulu-Construction1

FROM A PROFESSIONAL ENGINEER’S POINT, SHARED WITH PERMISSION GRANTED

A road built to the highest standards in Malawi would cost about K160m per kilometre at the max nowadays. The K90m per kilometre would be a road where traffic volumes could be very low.

If the road in question is the Lilongwe Old Airport – Kasiya one, then I wonder how they came up with that K39 billion for the 95 km. As a Consultant myself, I would have accepted something like K20 billion. Not that crazy figure. Of course if my memory serves me right, the existing is low and requires raising to fight off drainage problems, but the additional K19 billion would build us another 95km road.

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In Malawi, we don’t buy gravel – which is the main component that will be used to build that road before surfacing. We only buy crushed stone which is used to construct the base. The only cost incurred in procurement of gravel is the mining process and a small compensation fee. If the average hovered at K260 million per km, I would have been more than pleased knowing we are getting a road at the right value. Trust me, a couple of billions will exchange hands at the end of the project. In a situation where Civil Works Contractors compete fairly, MOTA ENGIL would not be ranked the best Contractor, sadly, they are politically appointed. I’m fed up!

Mwamva inu @ Ackson Kalaile Banda, Jeith Mkwapatira Banda, Leon Matanda, Thomas Chafunya, Joloji Salijeni, Alick Kavikumba Nyasulu, Foster F. Fundi, Eisenhower Mkaka, Hon Jacob Hara, Rhino Chiphiko, Juliana Lunguzi and anyone who may share a concern.

Construction Sector Transparency Initiative (CoST)

Construction Sector Transparency Initiative (CoST) is an initiative recently launched in Malawi

Launching the CoST Malawi website, on Monday evening, Vice President of Malawi Saulos Chilima said that:

“I hope that respective governance structures, project implementing agencies and construction industry stakeholders will take this as an opportunity to demonstrate to the world that Malawi can be a shining example of good governance and prove to ourselves that it is possible to develop our country”

Chilima said he was committed to ensure that reforms incorporate CoST principles so that disclosures cover the whole value chain of construction activities in Malawi.

This is an interesting development in the construction sector in Malawi because as some readers will know, the Cashgate corruption scandal badly portrayed the construction sector in Malawi.

So one can only hope that the sector will fully embrace these reforms, because clearly there are advantages be realised.

However, lets look at the issue in a bit more detail.

According to CoST’s international website:

It is estimated that upwards of $4 trillion annually is lost through mismanagement, inefficiency, and corruption in public infrastructure – on average 10 to 30 percent of a project’s value. These losses have a negative effect on the quality, safety, and value of the built environment. Specific investigations have found much larger losses in some cases, including projects that were paid for but never built and projects that collapsed with injury and loss of life. 

In terms of inefficiency and mismanagement one can understand why the stakeholders would want better efficiency and management. It would reduce waste and introduce a greater level of safety.

But when it comes to corruption, I’m not quite clear why a sector that has struggled with endemic corruption for decades would suddenly want to reform itself, simply because it is being asked to publish details of the procurement process?

Let me put it this way, publishing the pre-contractual process could make it harder for corrupt officials to hijack the procurement of public contracts, but does it shut the door to corruption in procurement altogether?

Consider this scenario:-

Suppose a procurement committee had a preferred provider of certain services prior to publishing of a tender, by virtue of an inside secret agreement between officials, their boss, and this particular provider. A deal that would be of financial benefit to the members of that committee. What is to stop some members of that committee from secretly assisting the preferred provider to submit the strongest bid, one that fulfills all the conditions of the tender, and is likely to be the most attractive? What is to stop officials doctoring the process behind closed doors to ensure the preferred provider’s success? Especially if the help given, is given in secret?  What will guard against such a scenario?

I think it is more logical for certain checks and balances to be established as part of this initiative, to make it more ‘foolproof’. The Vice President Saulos Chilima must ensure that some additional measures are implemented in all public procurement dealings. For example, this initiative could go much further by demanding that no prior conscious contact whatsoever must have taken place between the members of the awarding committee, or an employee of the awarding body or ministry, and prospective bidders, when they knew a contract has been published. Further, to ensure that committees awarding contracts are formed from competent yet unconnected individuals, who do not work together, and have no social relationships, awarding committees should be made up of people from different sectors, who do not know each other, who do not work together, who are not part of the same social circles, who come from across the country, and who critically have declared their political support( i.e. they support different political parties). All this is important to make it harder for a conflict of interests to arise.

So as an example, if the Ministry of Natural Resources, Energy and Mining is considering publishing an invitation to tender for some goods or services it requires, an awarding committee could be made up of nine individuals:- two from the ministry itself, three from Civil Society Organisations, one ordinary member of the public, one from a religious organisation and two diplomats from different foreign consulars.

In my view, awarding bodies composed of such a makeup, although operating at a cost to the government, are highly unlikely to award contracts on political or regional lines, or in situations where a conflict of interest exists.

Further, while best practices can be imported from other CoST implementations across the world, the threshold in selecting successful bidders should be improved, so that only those with the highest rating, and strongest bids, as agreed by a large majority (at least 7 out of the 9) of the committee are awarded the contracts.

Finally, smaller players need to have their own categories, so that they are not disadvantaged merely by their size, when pitted against larger companies.

CoST Malawi is directed by a Multi-Stakeholder Group (MSG) that comprises representatives from:

  • Ministry of Irrigation and Water Development,
  • the National Audit Office,
  • Accountant General,
  • Director of Buildings,
  • Anti-Corruption Bureau,
  • Office of Director of Public Procurement,
  • Malawi Building, Civil and Allied Trades Association
  • Malawi Economic Justice Network,
  • Human Rights Consultative Committee,
  • Business Action Against Corruption,
  • African Institute of Corporate Citizens

All sounds good and well on the surface. Anyone can cobble together rhetoric and words that sound heroic and purposeful. But the implementation of this initiatives is what counts. The devil is always in the detail. In my view, the essential features  are not good enough. More needs to be done to prevent abuse of process like the scenario provided above.

China Funding construction of new airport in Malawi

First it was a parliament building, then a road to connect Karonga and Chitipa, a five-star hotel, followed by a stadium, and now it seems they will be building an Airport. China is Africa’s new friend and within the last decade, they have made some serious inroads into Africa. The question that interests me looking at all the things China is doing in Africa, and considering they are not a colonialist is this: why didn’t any of the former colonialists build infrastructure comparable to what China is building in Africa today, when back in their own countries, they continued to build structures which no doubt contributed to their economies during the same period? Especially since some of these organisations had large empires which no doubt contributed to their enormous wealth….

Was it because they didn’t think Africa needed its own infrastructure? There was no plan …? Or was it because they had no money?

Anyhow i’ll ponder that another day 🙂

While President Joyce Banda should be commended for pushing through this excellent development (which is exactly the kind of infrastructure Africa needs) since it is true that our airports are outdated and in serious need for improvement, I wonder what she has granted the Chinese in return? What does the deal involve? Is the deal public? Would be interesting to see what is being offered in return…

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