The Art of Procurement

Third-ranked Zimbabwe bidder wins tender to provide anti-corruption software in Malawi

By Gregory Gondwe 3 September 2018

Goats being sold at Mdeka market near Salima, Malawi 15 May 2017. EPA/AARON UFUMELI

Malawi's Parliament’s budget and finance committee has strongly criticised both the long delay in the procurement of anti-corruption software and the sudden engagement of Twenty Third Century Systems.

Top Malawian officials have declined to explain why the government has engaged a Zimbabwean firm to provide anti-corruption software worth ten billion kwacha (R180-million) – three years after the tender process.

A Treasury source said Zimbabwean-owned Twenty Third Century Systems – a “gold partner” of German-based multinational SAP – has been sent a letter accepting its bid, even though it was third-ranked bidder in 2015 and its bid is understood to have expired a year later.

The software solution for the state’s new Integrated Financial Management Information System (Ifmis) is intended as a response to the 2013 Cashgate scandal, which exposed the weakness of the Malawi government’s financial controls.

Parliament’s budget and finance committee has strongly criticised both the long delay in the procurement and the sudden engagement of Twenty Third Century.

Rhino Chipoko, the committee’s chairperson, said the committee did not normally intervene in procurement issues, but “we are really concerned about this one because it looks like a misprocurement”.

Chipoko went on to suggest that the procurement delay might have been driven by corrupt motives.

The committee strongly believes that the delays are to make it possible to siphon off money, because the current Ifmis is so porous,” he said.

Parliamentary public accounts committee chairperson Alekeni Menyani described the procurement as “worrisome”.

If the system that is aimed at dealing with fraud is being (improperly) procured, then we really are damned,” Menyani said.

Accountant General Chrighton Chimombo said he could not comment “beyond saying that the Ministry will come with a clarification on the procurement and implementation of the new Ifmis in due course”.

Chimombo referred the matter to finance ministry spokesperson Davis Sado, who also declined to comment, saying questions could only be answered by the Accountant General’s office.

Malawi’s accountant-general oversees all government agencies responsible for systems administration, accounts reconciliation and financial reporting.

Twenty Third Century declined to comment. The firm’s operations manager for Malawi, Kondwani Mbewe, said the managing director, Gilford Kapyola, was the right person to shed more light on the deal. However, Kapylola said: “You’d better take these questions to government, as they are the ones managing the procurement process.”

A call to South African tech service provider EOH, which has a substantial stake in Twenty Third Century, also failed to shed light on the tender.

A spokesperson for the company’s media desk who would only identify herself as “Elissa” said EOH was not qualified to comment because it is a minority shareholder.

If anything, it is Twenty Third Century that should comment,” she said.

The secretary to the Treasury, Ben Botolo, indicated that the Treasury is unhappy with the procedure followed in the procurement and believes the tender process should be restarted.

But he also said that the final decision lay with the Accountant-General.

Botolo remarked that much may have changed since bids were submitted in 2015, when he was not in office.

He was particularly worried that the price of the job would have to rise, saying he would be “surprised if the vendor maintains the same price. I’m saying the best way is to redo the whole process; put it out to tender and come up with fresh price quotations”.

That is the advice I gave Chimombo, but their position is that we need to go ahead with the current process.”

Botolo also contradicted Chimombo’s recent statement that government has set aside MK5-billion (R96-million) to train staff in managing the new system, saying this allocation would be used for the procurement of Ifmis.

He also said that once the new service provider was identified, it might take time for it to gear up because the new Ifmis would run concurrently with the current system for up to two years.

There are issues of software and hardware that have to be resolved in line with compatibility with the servers. We also want the new Ifmis to interface with the Human Resource Management Information System,” he said.

Botolo revealed that the new Ifmis was initially conceived as a joint project of the World Bank and the Malawi government. The bank, whose contribution was a “negligible” $2-million of a total $13-million earmarked for the project, had later withdrawn.

The World Bank’s country manager, Greg Toulmin, confirmed the IMF’s withdrawal after it was agreed that “government could procure the system through its own resources and procurement system”.

However, Toulmin also indicated that the bank was unhappy with the Malawi government’s overall approach to public sector corruption.

He said that although it was an important tool in reducing the abuse of public funds, “technology on its own cannot address human elements that affect effective administration. These include … behavioural attitudes, incentives for managerial accountability and staff performance at all levels.”

Toulmin said Cashgate had exposed the “pervasiveness of corruption in Malawi and rightfully increased stakeholder demand for much greater scrutiny in the management of public resources”.

Corruption continues to be one of the major obstacles blocking Malawi’s road to prosperity.

However, real and substantial progress towards eliminating corruption requires more resolute political and civil will to build on current efforts.”

A full list of the 2015 bidders and their bid prices shows that the bids all expired in early 2016.

It is understood that the government’s preferred bidder at the time was British-based TBL Systems, whose price on the job was US$6.6-million.

Botolo agreed that Twenty Third Century’s price – $13.8-million – was significantly higher.

He said he understood that the Accountant-General’s office had been discussing this with the Zimbabwean company.

The list of bids shows a very wide spread of prices, with the highest being KPMG’s at $47.9-million.

Grace Thipa, spokesperson for Public Procurement and Disposal of Assets Authority (PPDA), said the government’s approach was based on the recommendations and approvals of evaluation teams and internal procurement and disposal committees.

She said the PPDA only checks that the procurement is transparent and fair.

In its 2014 report on Cashgate, Malawi’s public accounts committee found that the government’s existing financial control system was manipulated by criminals, leading to the massive theft of public resources.

The government launched a “business process review” by a task force that proposed the complete replacement of the system.

The committee noted that this was supposed to have happened by July 2014 “due to procurement processes in line with World Bank procedures”. DM

Vitus-Gregory Gondwe is a Malawian freelancer who works closely with the amaBhungane Centre for Investigative Journalism

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