Zimbabwe's SPB in eye of storm


SPB chairman, Charles Kuwaza

GOVERNMENT’S procurement agent, the State Procurement Board (SPB) has been caught in the eye of a storm once again amid revelations that it controversially directed schools to procure buses from three assembling companies it handpicked without going to tender under the pretext of supporting government’s Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset).
Investigations by the Financial Gazette revealed that instead of opening the tender to everyone, the SPB handpicked struggling coach building companies namely Deven Engineering, AVM Africa and automobile maker FAW Zimbabwe, a development which put into question their ability to deliver.
On the one hand, Deven Engineering is a unit of State-owned Industrial Development Corporation, which has since announced it intends to dispose of its entire shareholding and assets in its struggling coach-making unit to raise capital for new business.
On the other hand, AVM Africa is a struggling coach building entity hardly managing to keep its head above water due to the country’s economic meltdown, while FAW Zimbabwe is a franchisee of the Chinese state-owned automobile manufacturer, FAW Group Corporation. The SPB usually uses an open tendering process whereby any interested supplier can submit a bid, but, in this instance, it handpicked candidates in the proposed projects in a move that has raised eyebrows given that there are many other suppliers capable of supplying the buses who were not considered.
The Ministry of Primary and Secondary Education had requested to flight a formal tender for the supply and delivery of 6 000 buses to schools, which had all along been procuring buses at institutional level.
Zimbabwe has about 5 752 primary schools and 2 312 secondary schools.
But in a letter seen by this newspaper, SPB principal officer, Cledwyn Nyanhete, on April 1 rejected the request and wrote to Sylvia Utete-Masango, the permanent secretary in the Ministry of Primary and Secondary Education directing schools to approach three companies, AVM, Deven Engineering and FAW Zimbabwe for quotations.
Nyanhete argued that the request did not comply with government policies on vehicles.
“The State Procurement Board has through PBR 0365 of March 19, 2015, resolved that, the accounting officer’s request to float a formal tender for the supply and delivery of 6 000 buses, be and is hereby rejected for failure to comply with government policy on vehicles,” said Nyanhete.
“The accounting officer should in line with Cabinet circular number 16 of 2011 and mid-year fiscal policy statements of September 2014, as read with the Zim-Asset blueprint, approach the following bus companies for quotations: AVM, Deven Engineering and FAW Zimbabwe. You are therefore advised to proceed as follows — take all necessary steps as directed by the resolution and in all communications, please quote the above PBR and the date.”
Some disgruntled school heads have, however, expressed concern over the deal saying being restricted to the three struggling companies limited their choices.
They said the SPB should have invited tenders to supply buses to schools. Some argued that the decision to force schools to procure from these struggling companies instead of inviting other players was pulling the nation down and feared the preferred players have no capacity to undertake the multi-million dollar project.
With no Zimbabwean company capable of manufacturing buses at the moment due to economic constraints, observers have indicated that it was pointless to direct schools to just the three entities, who will simply import the buses.
The companies are already being accused of milking schools because they are now selling their buses almost twice the price charged by other players.
The struggling companies are importing their buses from China.
Sources said the three companies are charging schools between US$180 000 and US$200 000 per bus.
Other bus companies in the country are understood to be selling buses at between US$80 000 and US$100 000 per bus.
The situation has been worsened by the fact that the Zimbabwe Revenue Authority (ZIMRA), is now asking schools to pay 40 percent duty for buses plus 15 percent Value Added Tax at the border.
Prior to June this year, ZIMRA was not charging duty for buses.
No comment could be obtained from ZIMRA’s head of communications, Canisio Mudzimu, who had not responded to written enquiries by the time of going to print.
Now, it is understood that for schools to get tax exemption on imported buses, they are asked to get clearance from the Ministry of Primary and Secondary Education. And the Ministry of Education appears not keen on endorsing any deal that is not either from Deven Engineering or AVM or FAW Zimbabwe, a clear indication that the ministry supports the SPB move.
But there is a growing concern that these companies have neither capacity nor enough bus choices for school whose tastes differ.
This newspaper has it on good authority that all these companies are asking schools to pay at least US$100 000 deposit and then initiate the importation process for the buses from China.
When buses arrive in the country, schools are then asked to pay the balance before delivery.
Efforts to get a comment from the Minister of Primary and Secondary Education, Lazarus Dokora were fruitless. He called for a press conference on Monday afternoon to clear the air on this issue.
The conference was, however, cancelled after Dokora refused to address journalist in the absence of a ZBC crew.
In an email responding to the Financial Gazette enquiries, SPB chairman, Charles Kuwaza said: “…the circumstances where no tenders may be invited are varied. Regarding operational vehicles for use by the State, these should be procured from the local assembly plants such as Willowvale Mazda Motor Industries or Quest Motors. For buses or trucks, procuring entities should approach Deven, AVM or FAW who assemble the same. The Cabinet circular authorising the same is intended to boost local industry and create employment opportunities for our people.”