Thundafund: The crowdfunding platform made for Africa

Thundafund: The crowdfunding platform made for Africa (CNN)

“Kickstarter doesn’t really work in South Africa… it’s a difficult market to break in to… It could be said [Kickstarter] is more about making money than empowering people; there’s no responsibility towards funding more entrepreneurs. Patrick is providing opportunities and helping communities.”

A new way of doing business

Good ideas are “a dime a dozen” Schofield says, but many South Africans lack the “the skills and resources” to bring their idea through to fruition. New businesses that do receive funding are often saddled with heavy debts or give away significant portions of their company to investors in return for guidance. Whilst the likes of Kickstarter “stand aside” once a campaign is launched according to Kruger, Thundafund has guided its entrepreneurs through the process, optimizing their chance of attracting investors.

Who is interfering with MACRA’s mandate?

It’s a sad state of African politics that sometimes influential people attempt to hijack the institutional and democratic processes of doing things, for personal gain. Often money, lots of it, must have changed hands, and you end up with bigwigs attempting to influence or hijack decision-making in matters such as awarding of contracts, in legal or constitutional affairs, when the law is clear about how such things should be handled. This is bad for our countries across Africa, and is singularly the most common reason why our institutions fail to function properly. Leading to abuse that deprives the continent of billions. Because some people are willing to sacrifice the common good. In Malawi, a few days ago a story broke out on Nyasa Times alleging that one Ben Phiri is apparently pulling the strings behind the scenes to influence the Malawi Communications Regulatory Authority (MACRA) to award a licence to Lacell Private Limited. Now Lacell has an interesting history in Malawi. In 2008, they failed in its bid for a mobile license because they did not meet the criteria.  Lacell came 5th in the tender process after the other participants were either disqualified or pulled-out. It seems that after months of lobbying politicians (see another link here) they threatened to sue the Malawi government, claiming that they had been led to believe that they would be awarded a license. That they had participated in pre-contractual negotiations and had invested in Malawi, therefore deserved a license. But the ‘license’ they claimed, for which they received some media coverage, never got authorised, let alone gazetted. The Malawi Communications Act 1998 stipulates that a license is not awarded unless it has been gazetted. You can engage in negotiations or receive political promises but unless a tender has been advertised, bids received and reviewed, the bidders vetted and the preferred bidder selected, the succesful bidders are then passed to the president through the relevant ministry…and after some obscure governmental protocols at the highest level, a winner selected. The resulting licence is gazetted, and only then is the licence said to have been awarded under the laws of Malawi. Any contract award that does not follow this set out procedure as laid out in law is in contravention of the law. Thus, for renegotiation with Lacell to begin out of the legally accepted procedure stipulated by the law, outside the tender process, is not in line with the laws of Malawi.

But this resumption of talks is not entirely surprising. In appointing boards of MACRA, the Department of Statutory Corporations [which is part of Office of President and Cabinet (OPC)] issues lists of competent persons which are recommended as members for nomination to parastatals. The President then approves such appointments. But for the current board of MACRA, which was appointed in November 2014, rumour has it that the recommendation list was largely ignored, or the legal process was not entirely observed. Whether this was politically motivated or not is anybody’s guess. What is clear is that when selecting a new board for a regulatory authority, it is required that the composition of the board have people who possess the skills, knowledge and expertise relevant to the functions and mandate for that institution. For MACRA, the Communications Act states that certain numbers from the outgoing board should be retained for continuity. This makes sense because a new board unversed in the operations, intricacies and current affairs need time to adjust. To examine all the issues which the board has been wrestling with, and come up to speed. But when more than half, or all of the previous board have been replaced, what’s to stop a noisy, disgruntled and desperate former bidder who for years has been claiming the moon, to take advantage of the situation and try to bulldoze its claims, perhaps helpfully assisted by some monetary gifts to important people within a newly elected government. This it appears, is where Lacell comes in. Because  the last board of MACRA was replaced in its entirety, and surprise surprise, Lacell, who popped up during Bingu’s regime causing many headaches, who showed up again and again during Joyce Banda’s tenure, has once again showed up.

According to the OPC website: The Department of Statutory Corporations mandate is to ensure parastatal sectors optimal utilization and management of resources, in compliance with Government regulations, thereby contributing to national development. The Department provides financial, administrative and managerial oversight to the parastatal sector. Doesn’t the in compliance with government regulation mentioned in this mission statement mean that MACRA must operate by the law? Why then is Kondwani Nankhumwa, the minister of Information, Tourism and Culture, talking as if a deal with Lacell could be hashed outside the law? Disregarding the lawful processes. And the institutions that have been mandated to police and protect the processes?

Something fishy is going on. President Peter Mutharika would be best advised to put a firm stop to this fishy business, because it is not going to help Malawi in the long run. Our public institutions must be allowed to operate independently, without duress, and in line with the law.

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.