Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI



Malawi president dissolves cabinet in wake of graft scandal

Malawi President Joyce Banda dissolved the cabinet on Thursday after police arrested several junior officials in her government in recent weeks on suspicion of stealing state funds.

The presidency of the southern African state said in a statement that Banda, who came to office in April 2012, “will announce a new cabinet in due course.” It did not elaborate.

The presidency had said on Wednesday that Banda would meet her cabinet the following day to discuss the financial scandal and who was responsible.

It did not disclose details of Thursday’s meeting, but a senior government official, who asked not to be named, said Banda told the cabinet that she had “lost faith” in them.

The scandal, known locally as “cash-gate”, forced the government to shut down its payment system last week so that it could investigate over $4 million that went missing, delaying the payment of salaries to teachers, nurses and doctors.

Banda, who faces an election next year, has won acclaim in the West for austerity measures and moves to bolster the economy of the aid-dependent, impoverished country.

But steps such as an IMF-backed devaluation of the kwacha currency have stoked inflation, raised the price of food for the rural poor and eroded Banda’s domestic support.

The police said that about 10 junior government officials had been arrested so far for suspected graft, and that they had recovered tens of thousands of dollars in cash from their car boots and homes.

A small group of protesters marched in the capital Lilongwe on Thursday and delivered a petition calling for the sacking of top officials, including Finance Minister Ken Lipenga, over the scandal. Lipenga has denied any wrongdoing. He was not immediately available for comment on Thursday.

Last week, envoys from eight Western donor nations, whose aid traditionally has accounted for about 40 percent of the state budget, asked Banda to deal with the alleged corruption at the treasury and investigate an attack on the budget director.

“These are worrying developments that potentially risk Malawi’s stability, rule of law and reputation,” the envoys said in a statement.

Budget director Paul Mphwiyo was shot last month, but survived the attack.

After the shooting, the government’s Anti-Corruption Bureau and police launched an investigation into the budget director and unnamed ministers over suspected graft, indicating the scandal extended beyond just a few junior officials.

“People have lost confidence in (Banda’s) leadership and the best thing she can do is to order the arrest of senior officials involved and ask her finance minister to resign,” Lazarus Chakwera, leader of the opposition MCP, said at a public rally over the weekend.

Malawi’s troubled economy has shown signs of improvement in the past few months with inflation that was once running over 30 percent easing slightly, while earnings from its main export tobacco are expected to double this year from 2012.

Malawi to make a D.C. push

By Dave Levinthal and Anna Palmer with Abby Phillip

April 25th, 2012

MALAWI TO MAKE D.C. PUSH: Speaking of which, the Republic of Malawi has brought on the Whitaker Group and The Moffett Group to help it navigate Washington. The Whitaker Group will “facilitate visits to the U.S., meetings with stakeholders, including U.S. civil society organizations and the U.S. government and will help to build partnerships in key development-oriented sectors,” according to a document filed with the Justice Department. The firm’s consultant fee is $150,000 for three months work. The Moffett Group, meanwhile, is working a subcontractor for the Whitaker Group and will receive $6,000-monthly retainer over the three-month contract.

Malawi’s Central Bank angers local contractors

Malawi Today

April 18th, 2012

The awarding of a multi-million kwacha contract to a foreign contractor for curtain, walling and glazing of the Reserve Bank of Malawi (RMB) Mzuzu Branch has drawn the anger of a local contractor, who initially won the tender.

The company has since logged a complaint with the Office of the Director of Public Procurement (ODPP), protesting the tender.

The Business Times has in its procession a letter authored by a local glazing firm, Alda Malawi Limited/CSC International, to the ODPP in which it wants the tender to the South African cancelled because “certain decisions were made in the tendering process which favoured the foreign company at the expense of the local companies.”

Centurion Glass and Aluminium of South Africa was in January this year awarded the tender by RBM to install glasses and other fittings in the Mzuzu branch at a bid price of US$3.3 million (K560 million).

Alda Limited/CSC International Construction Manager Vaniel Sacrane confirmed that the firm authored the letter of complaint to the ODPP to seek its intervention on the matter, but refused to comment on the matter further to allow for an independent review by the ODPP.

RBM spokesperson Ralph Tseka also confirmed the awarding of the tender to the South African firm but dismissed claims that there was contravention of procurement procedures in the process.

“The process was conducted fairly and transparently,” said Tseka.

However, the protest document to ODPP authored by the local contractor, among other things, claims that Centurion did not meet some of the bidding requirements, including submission of a bid security as required in the tender, which meant they were supposed to be disqualified right away as stipulated in the “Instructions to Bidders” booklet for the tender.

It also says Centurion Glass and Aluminium are not registered with the National Construction Industry Council in Malawi as required for the tender.

Alda Limited also alleges that press reports in South Africa had recently indicated that Centurion Glass and Aluminium was indicated as a company was in financial problems as it was involved in legal wrangles with previous owners.

“This meant Centurion were supposed to be automatically disqualified from the bidding process in accordance with the tender guidelines,” reads the letter from Alda Limited.

The document also argues that Centurion, being a foreign company, will have to be paid in foreign exchange which would be a needless drain of the much needed forex as the country is struggling to have enough forex reserve cover.

On the other hand, the local companies expressed willingness to be paid in local currency for part of the charging fee.

According to bidding results the Business Times has, it shows one of the local companies Alda Malawi Limited who, with their Chinese consultants, have done the cladding and glazing of the National Bank new headquarters in Blantyre, satisfied all requirements but were disfavoured at the last hour for no apparent reasons.

Section 30 of the “Instructions to Bidders” under domestic preference clearly states that: “domestic bidders or other bidders using Malawian nationals to carry out the works shall receive a margin of preference in Bid evaluation”.

RBM has, however, denied any wrong doing in the awarding of Centurion as the deserved winner of the bid.

In an e-mailed response, Tseka acknowledged that Alda Limited were initially the successful bidder for the tender but were later disqualified after is was discovered that there was no formal agreement between them and their Chinese sub- agent.

“During the assessment, it was noted that there was no formal agreement to commit the sub- agent (Alda/Beijing) to CCS International. The bid was therefore disqualified for lack of proper documentation to support Alda/ Beijing as sub–agent to CCS International. This meant that the bank disqualified all bidders who submitted proposals,” said Tseka.

He said because of this development, and because some of the international companies were conversant with requirements as stipulated by the Malawi Government Public Procurement Act, the bank asked all bidders to re-submit their bids with particular attention on the administrative and technical areas.

He said it was after the re-evaluation of the second bid when Centurion emerged the preferred bidder due to their overall price competitiveness.

Tseka admitted that RBM received information about the alleged precarious financial position of Centurion, but said the company successfully defended its financial position at a meeting that was convened in November last year.

He also said the ODPP does not bar foreign companies from participating in procurement processes, but the requirement is that upon being awarded the contract, the foreign company should register with NCIC.

Apart from Alda/CCS International and Centurion Glass and Aluminium other companies which participated in the bid were Arcelormittal International and World of Windows.

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