The future for Chinese telecom companies in Zambia looks uncertain following the Southern African country's decision to rescind a US$220 million tender for a digital migration project.
The tender was awarded to China-based Star Software Technologies Co. after a successful bid, but the Zambian government has announced that the tender has been cancelled.
The Zambian government revealed that there were irregularities in the manner the tender was awarded to the company.
It is the second tender awarded to a Chinese company to be cancelled by the Zambian government in less than three weeks, underscoring the growing controversy surrounding the awarding of ICT contracts to Chinese firms in Africa.
Early this month, the Zambian government terminated a $210 million closed-circuit television (CCTV) camera contract with China's ZTE following allegations of corruption in the manner in which the tender was awarded.
The CCTV camera project was initiated by the Ministry of Home Affairs to assist with crime prevention, traffic management and general monitoring of the streets of the capital, Lusaka. The Zambian government could have lost $100 million if the tender had not been canceled because the price was exaggerated, according to government sources.
The matter is now being investigated by the Anti-Corruption Commission (ACC), the country's anticorruption watchdog.
In canceling the Star Software tender, the Zambian government said it acted based on the recommendation from the country's procurement authority, the Zambia Public Procurement Authority (ZPPA).
Ministry of Information and Broadcasting Services Permanent Secretary Emmanuel Mwamba said at a media briefing, "the tender has been cancelled because my ministry has an obligation to ensure that it executes any government project in a transparent manner."
When Star Software was announced winner of the tender a few months ago, two other Chinese companies, ZTE and Huawei Technologies, immediately appealed the decision. The two companies pointed out in their appeal irregularities in the bidding process that made them losers.
According to a letter by ZPPA Director Denies Chisenda to the Ministry of Information and Broadcasting Services on Sept. 13, the evaluation report for the tender had also failed to state that Star Software had offered refurbished Umatic and Betacam machines, a technology termed obsolete by ZPPA.
Transparence International Zambia has since called for the arrest of the government officials involved in the awarding of the tender to Star Software. Transparence International Zambia Executive Director Goodwell Lungu said, "while the action that has been taken by the Zambian government to cancel the tender is recommendable, leaving the perpetrators of such irregularities to go scot-free may cause future potential danger as the perpetrators may opt to use the same weaknesses that led to the cancellation of the tender."
Sign up for CIO Asia eNewsletters.