Military Entity Could Outgun Private Firms

There is growing fears that the recently launched military construction company could out compete civilian companies in the construction sector.

Fears surfaced after the Minister of Defence, Nahas Angula, on Monday unveiled the August 26 UBM Construction (Pty) Ltd company in Windhoek.

The company is fully government owned through the Ministry of Defence. It was registered in July 2013.

NDF follows in the footsteps of the Egyptian military, which is well known for its involvement in that country’s construction sector, after receiving contracts worth billions to carry out large infrastructural projects.

The army’s roles in Egypt’s domestic affairs have, however, raised questions about the commercial role of the military, especially the fairness and accountability of its practices when competing for state contracts with private construction firms.

August 26 UBM Construction MD, Colonel John Namoloh, on Tuesday told New Era that the company will diversify its operations and will therefore not only focus on competing for contracts within the defence ministry.

“We want to compete with others because we joined the mainstream construction industry. How do we make profit if we only follow the shareholder? It does not make sense. Transnamib does not only transport goods for the Ministry of Works and Transport, that is not how you make profit,” said Namoloh.

He said the company will engage local partners that have “financial muscle and expertise in order to enter into equity partnerships”.

“Where we lack skills and finance, we will enter into partnerships with local partners and share the profits,” he explained.

Namibia Chamber of Commerce and Industry (NCCI)’s CEO, Tarah Shaanika, questioned the need for an armyconstruction company within the sector, which has over the years been adequately serviced by the private sector.

“I do not know whether government wants to drive out the private sector when it comes to construction, this is worrying. One would expect the state to intervene and channel investments into sectors that the private sector is not investing in. In general, the construction, logistics and telecommunications industries have been adequately serviced by the private sector,” said Shaanika.

Shaanika is wary that government seems to be investing in the wrong sectors and therefore missing its targets.

“This can create a monopoly in the industry because most of the construction work is provided by the state and now the state wants to compete for the work which it provides, there is a danger of unfair preference when a state company competes for a contract with private companies,” he warned.

Shaanika says the state is assuming too much control of the country’s small economy instead of allowing the private sector to carry out certain tasks.

“I must say the private sector did well over the years in terms of doing quality work when it comes to constructing roads or buildings,” said the CEO.

“I do not see why the state feels it should get involved in the construction industry, if it claims that it is because of a backlog of military infrastructure, then this is clearly not because the private sector could not do the work, but rather because the military never approached the private sector,” he said.

Shaanika aised government to invest more in sectors such as agriculture, energy and manufacturing sector.

“We need more investment in agriculture to ensure food security in the country because the private sector is not adequately investing in that sector. The manufacturing sector also needs attention so that we can add value to our raw material for the local and international markets,” he said.

He warned jobs could also decline in the construction industry if state companies push out the private sector, because they will be forced to scale down their activities.

“The economy is too small to have g state players as well as g private players. We need to review the role of the state in the country’s economic activities,” he said.

Angula on Monday told New Era, “Competition is good. The private sector is not excluded, if they can give a good price then fine, but if they expect favours they must know that defence comes first,” when asked whether the private sector will still be allowed to tender for military tenders.

The Minister of Regional and Local Government, Housing and Rural Development Minister (Rtd) Major General, Charles Namoloh at the launch said he hopes the new company can be roped into the mass housing programme to expedite construction of houses under the programme by building cheap affordable homes.

August Twenty Six UBM Construction (Pty) Ltd is the ninth subsidiary company of NDF’s commercial wing, August 26 Holdings, which has interests in areas such as manufacturing war machines, textiles and uniforms, satellites, catering, logistics and insurance.

Source : New Era