Government cancels all contracts with private companies

Finance Minister Abdirahman Beyle cancelled all contract with private companies with effect July 31, 2017. File Photo: courtesy

The government has cancelled all contracts with private companies and instructed the department of Inland Revenue to handle all new contracts henceforth.

In a memo dated July 29, the Ministry of Finance said it was cancelling all contracts with effect from July 31, a move which saw 17 private companies lose contracts with the government.

The contractors affected range those providing passports, visas, transport, to companies supplying food rations to the police. Others are companies printing birth certificates, company licensing, vehicle registration plates among others.

The Ministry did not cite reasons for the cancellation and it is not also clear if the affected companies are eligible to bid for similar contracts in the future.

The cancellation comes as the government seeks to tighten the noose on public finance management and enhance revenue collection. A World Bank report Tuesday said the government was losing revenue as a result of weak systems and lack of effective controls on public finance.

“Reforms in public financial management (including strengthened domestic revenue mobilization), and strengthened governance are needed to raise more resources for development and ensure that the increased resources are used wisely and efficiently,” the report said.