What sits behind the failure of Government quota auction?

The auction of Government fishing quotas has ended in an embarrassing episode for fisheries minister Albert Kawana. The auction raised N$8,46 million [the auction was supposed to raise N$627 million had all bidders honoured their financial commitment].

The reason for the auction’s failure was described yesterday as “cocktail of troubles”. Firstly, Government’s persistent [and rapidly] deterioration consultation process with the fishing industry. Secondly, the fishing industry itself which does not support the auction of Government fishing quotas. Thirdly, Namibia’s “tenderpreneur culture” which is guaranteed to scuttle any good intentions.
In a lengthy statement on Wednesday, Dr Kawana had to concede the auction was unsuccessful. Of the 72 000 metric tons horse mackerel quota, 1 517 metric tons sold. A mere 100 tons of the 11 000 hake quota were sold, and monk fared much better with 300 metric tons of the 390 metric tons offered for auctioning sold.
“Out of the highest successful bidders, only five bidders managed to take up their offers and settled their payments obligations which amounted to N$8 446 000”, the minister is quoted from the press statement. Dr Kawana expressed hope for more bidders to honour their payment obligations for the auction”.
From Dr Kawana’s statement an inference can be drawn that more Government fishing quota auctions will follow, and that measures will be implemented for bidders to first deliver guarantees for payment and properly plan ahead, before they can take part in the bidding process.
“We believe that the auction is still the best option for our Government Objective fish Quota”, the minister is quoted under point 6 of the press statement.
Under point 15 of the statement: “We have learnt good lessons from this auction and that will be valuable going forward. In the future, punitive measures will be introduced including requirements for payment guarantees or bid securities before participation in the auction. This will ensure that bidders meet their financial commitments and mitigate the risk of speculative bids. In addition, more time will be given to bidders to arrange their finances. Furthermore, bidders will be required to prove that they have access to fishing vessels”.
Stakeholders in the fishing sector said on Wednesday night and Thursday it was no surprise to them that the auction ended on this note.
“Several weeks ago, when Government announced it raised N$627 million on the auction my first reaction was – were these promises to the tune of N$627 million or actual money deposited into the State Revenue Fund? My suspicions proved me right: The auction bagged a mere 1,27 % of the promised N$627 million”, says one stakeholder.
From the remaining reactions by stakeholders, the following came strong to the forefront.
Dr Kawana as Fisheries Minister and the Namibian Government in general must as a matter of urgency mend the fences with the fishing industry. There is anger and mutual issues of distrust between Government and the fishing industry.
Aggravating factors include the damage caused by #Fishrot, ongoing frustrations with quota allocations and the politicisation of right- and quota allocations.

The fishing industry does not support the auctioning of Government fish quotas. The industry argues there are more realistic and practical options available. Dr Kawana in his own words in the press statement on Wednesday said the fishing industry through the Confederation of Fishing Associations does not support the auction.
On the issue of those who placed bids, a number of fishing industry stakeholders said they are not surprised that the auction closed with 98,3 % promises and 1,27 %
“If you participate in any auction your first personal requirement would be to either have the money to spend or secondly to be sure you have access to the required funds. To bid for a fish quota, only to run around after you placed your bid looking for someone to buy it, is high risk business behaviour.
Secondly, to place overpriced bids means a lack of basic market research on the side of the bidder. That is the main reason why so little bids ended in hard cash earned for Government.
Many of the bidders placed their bids without understanding what they buy and at what price can they re-sell. There was also no proper process to first arrange for access to funding to bridge the period between the allocation of the bid and for the bidder to sell his or her allocated quota. The fact that many had no access to fishing vessels or tried to persuade the minister to extent the fishing season are more signs that most bidders did not do their homework properly”.
“I have no problem with businessmen or prospective entrepreneurs taking calculated risks. However, uncalculated risks are tell-tale properties of tenderpreneurs. It is almost guaranteed to end in failure”, concludes one stakeholder on the matter. Adding this is not only limited to the fish quota auction.
There are countless other examples where tenderpreneurs obtain access to lucrative deals, whether in the form of rights or tacit assets like land or resources. It does not require any risk exposure from this person at that stage.
Once the person has the privilege in his hands, he or she sell it off to the next person who has to bear all the risks.


You must be logged in to post a comment Login