During the COVID-19 crisis in Nigeria, the ministry of water resources awarded contracts worth N1.02 billion to ninety (90) inactive and twelve (12) unregistered companies, according to an investigation conducted by Dataphyte.
According to the rules and regulations of the Corporate Affairs Commission, inactive companies are legal entities that have failed to comply with Sections 417 – 424 of the Companies and Allied Matters Act, 2020 in filing their annual returns with the Commission. Section 417 of the Act requires every company to, once at least in every year, make and deliver such to the Commission yearly. Section 237 (5) prescribed a penalty for any company that defaults in holding this meeting.
Thus, these awarded contracts contravene Section 43 of the Public Procurement Act 2007.
PEWASH project may suffer a setback
The companies in question were part of the beneficiaries of COVID-19 contracts meant to provide water projects under the Ministry’s Partnership for Expanded Water, Sanitation and Hygiene (Sanitation component), also known as PEWASH.
PEWASH was launched in 2016 by the Ministry of Water Resources to address the challenges in the water supply and sanitation sub-sector. During the inauguration, the Minister of Water Resources, Engr. Suleiman Adamu said the programme “would be a purposeful synergy of all activities aimed at achieving access to potable water and increase in irrigation for all Nigerians.”
The policy aims to achieve Sustainable Development Goal 6 by ensuring availability and sustainable management of water and sanitation for all.
Despite inadequate FOI responses, Dataphyte found out that the PEWASH programme may suffer setbacks due to faults in the procurement processes and violation of the Public Procurement Act 2007.
Only 8 out of the 111 companies have active CAC registration
Analysis of the list of successful contractors made available to Dataphyte through the Freedom of Information (FOI) responses from the Ministry of Water Resources showed that only 8 out of the 111 companies have active registration status with the Corporate Affairs Commission (CAC). Of the eight companies, one completed its CAC registration after the contract had been awarded.
Findings showed that the company, Kakiya Trading and General Contractors, completed CAC registration in December 2020. A move which shows that the company might have registered because of the COVID-19 PEWASH contract.
Full list of active companies on the PEWASH project
Further analysis revealed that another set of twelve (12) companies have no registration record with the Corporate Affairs Commission (CAC), a body charged with incorporating companies in Nigeria. The companies are listed below:
Federal Ministry of Water Resources/Dataphyte research
CAC reacts
Mr Aliyu Yazid, CAC’s Deputy Director of Public Affairs, confirmed that any company with ‘inactive’ status shows that the company has failed to file annual returns with the Commission.
“Filing of annual returns show details of the Company’s AGM and also tax returns and others.”
Mr Yazid said the filing of annual returns is crucial because it allows the Bureau of Public Procurement (BPP) to ascertain the operationality and functionality of any company that seeks to get the government’s contract.
“At the point of registration, all companies are informed to file a return of their accounts and payment of taxes to the Commission within stipulated time – as the repository of such documents”, he said.
When asked about the implication of awarding a government contract to an inactive company, he said the Commission is not in the best position to discuss the legality.
Ministry’s reactions
Earlier, Mr O. N. Ibrahim, Director, Legal Services at the Ministry, told Dataphyte that he cannot speak to the request, but will respond through another FOI response.
Implication for Nigeria
Awarding contracts to unverified, inactive and unregistered companies negate Section 43 of the Public Procurement Act 2007. Though the COVID-19 crisis period made a case for emergency procurement, the relevant section stipulates that it must conform with the principles of accountability. Also, Section 113 (h) of the Procurement Act mandated all accounting officers of MDAs to ensure compliance with the provisions of the Public Procurement Act by their organisations. Last year, the Public and Private Development Centre (PPDC) urged all MDAs to carry out emergency procurement under strict BPP guidelines.
Apart from violating procurement laws, the shoddy handling of the WASH contracts by these inactive and unregistered companies may undermine and wipe out gains recorded towards achieving Goal 6 of the Sustainable Development Goals (SDG) of the United Nations. Goal 6 stipulates that, by 2030, nations should ensure access to water and sanitation for all citizens. According to UNICEF, poor access to improved water and sanitation in Nigeria is still alarming and contributes to mortality and morbidity in children.
The ambition to achieve Sustainable Development Goal 6 by 2030 for Nigeria is a high one, and the World Bank has estimated that the country needs a 1.7 per cent allocation to WASH from its Gross Domestic Product to meet the target. Awarding contracts to unknown companies may forfeit the little funding currently committed to achieving this goal.
editor’s note: This story has been updated to include an earlier comment from the Water Resources Ministry