Award of contracts to Khato should follow due proces: ‘South African firm to construct tollgates in Malawi’

According to media reports, the government signed a Memorandum of Understanding (MoU) with Khato Civils (Pvt) Limited of South Africa for three projects valued at $1 billion (about K780 billion) during the Malawi Investment Forum (MIF). Under the MoU, the Khato will construct tollgates, a modern bus terminal along the Likuni Road and a water supply system from Senga Bay to Lilongwe through the Lake Malawi Water Supply Project.

What is not immediately clear is who will fund the projects.  Is it the government or Khato or joint venture projects? From the nature of the projects, government will finance the projects probably with an element of some donor funding

By signing the MOU, the government is sending the message that the deal is sealed. And judging by the statement from Khato Public Relations Manager the company has clinched the deal to implement the projects. But one wonders on what basis government has awarded the projects and signed the MOU with Khato when no tender notice was issued. If anything, theprojects should gone through a tenderprocess so that other companies should vie for them. This also eliminates overpricing and enables government to have several options to choose from.

The core purpose of the Malawi Investment Forum (MIF) is to sell to investors the investment opportunities that Malawi has.  It is an opportunity for investors to get information on how they can invest in Malawi. This presupposes investors will make their investment decisions on the basis of information they get during the forum. It also presupposes that investors will use their own capital and invest in sector (s) that they would earn a return on their investment. They may also enter into joint venture with government or local a company, but they must contribute some capital.

So MIF is not a forum to award contracts to investors whether local or foreign. It should not be used as springboard for government to award investorscontracts. If the intention of investors is to win contracts, they should follow due process which is through tender. It raises eyebrows that when Malawians are expecting to hear that foreign investors have shown interest to invest in this or that sector, one hears that government has signed the MoU with a foreign company to implement projects. Come to think of it, whenwas the MoU negotiated since the MIF was only for two days? The impression that one gets is that negotiations were done a long time ago and the MIF was just used as an opportunity to sign the MoU.

That Khato has the capacity to undertake the projects is neither here nor there. The issue is how Khato has been awarded such multi-million projects without a tender. The awarding of government projects require due process to be followed.   They are not awarded at meetings, but through a transparent evaluation process.Government need to provide more information on the MoU (e.g. how they arrived at choice of Khato).

Any MoU between government and anycompany should emanate from a tender process. Otherwise some individuals may want to benefit from the MoU. What is so special about constructing a bus terminal or tollgates or water supply system or hotel that Khato should sign MoU without any tender? Can MPs, NGOs and other interest groups probe into the issue?