Blinart Investments Defends US$9 000 Per Laptop Price

1 year agoTue, 13 Dec 2022 10:12:49 GMT
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Blinart Investments Defends US$9 000 Per Laptop Price

Blinart Investments managing director, Elizabeth Muchenje, defended the US$9 200 per laptop price which the company had levied the Parliament of Zimbabwe in a tender that was eventually cancelled.

Addressing the Parliamentary Public Accounts Committee (PAC) committee on how laptop prices reached a price of US$9000 each, Muchenje said:

It was a high-end laptop with seven other accessories with it.

Muchenje said the laptop was priced at US$9 264.49, payable in RTGS – the local currency – at the prevailing bank rate. She further gave a breakdown of the costs of the laptop.

There was the HP Spectra 32GB laptop, Laptop Stand, Laptop Backup, HDMI Adapter, USB Adapter, Wireless Mouse HP, Laptop pouch, and Microsoft Professional Office 2019.

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The cost amounted to US$5 176.36 for the laptop and all the accessories.

The company factored in ZIMRA Tax (14.5%) and courier charges, hotel and tickets, US$6026.12.

Markup (35%) US$2109.14 per laptop. 

The Grand total rose to US$9 314.87.

NB: laptops don’t pay customs duties, but they pay Value Added Tax (VAT) of 14.5%.

The Ministry of Finance and Economic Development issued statements to the effect that it had cancelled two tenders to supply laptops and desktops arguing that the suppliers had overpriced the commodities.

Blinart Investments which had been awarded the tender to supply laptops was selling each laptop at USD9 264.49  and the government would have paid US$1 602 755.77 for 173 laptops.

The other company, Mid-End Computers and Hardware (P/L), demanded US$243 052.36 for 79 desktops as each was priced at USD3 076.61.

Members of the public criticised Parliament for awarding the tender saying this was grand corruption.

It also emerged that some companies, Lacheln for instance, submitted bids for the Laptop tender at Parliament for as low as $213 655 but Parliament opted for Blinart which had tendered for $1.6 million. 

Previously, Pindula News published a Twitter thread by Michael Rushizha @mrushizha who believes that Blinart Investments’ price was justified. This reporter believes it is important to reproduce the post for some context. See below:

It is important to understand that this is not just any laptop. This is a high-end laptop with a touch-screen, some fancy software and accessories. These laptops don’t come cheap. We need to break down the requirement into smaller components for everyone’s comprehension.

According to pages 16 and 17 of the tender document, Parliament of Zimbabwe ordered 173x 13.3 or 14-inch laptops consisting of the following: 1x Microsoft Office 2019 Professional 1x Sophos Antivirus 1x HP Wireless Mouses 1x HP Laptop Stands 1x HP Laptop Carry Cases.

Now we need to cost each item. For the 13.3 or 14-inch laptop, I’m going to use a ‘cheaper’ HP EliteBook 840 G8 for this example. This baby costs a cool USD 2,259.00 with a storage of 512 GB. We need the storage to be 1.0 TB, so we add USD 80.00 to get USD 2,339.00.

Next, we need to factor in the cost of Microsoft Office Professional. The current version is 2021 and it goes for USD 439.99 bringing our running total to USD 2,778.99.

We also need a Sophos Antivirus license, which is actually an annual subscription. This license costs USD 28.00 per user, or per laptop. This brings our running total to USD 2,806.99.

Next, is the Wireless Mouses going for USD 16.99 each. This brings our running total to USD 2,823.98

The HP laptop stands are next for USD 49.95 each. This brings our running total to USD 2,869.93.

Last but not least, the HP laptop carry cases go for USD 36.99 each. This brings our running total to USD 2,906.92

Now the business dynamics. These computers are not manufactured in Zimbabwe or Africa. The prices are from HP, so I’m going to use a 3% shipping fee to one of the South African distributors which suppliers in Zimbabwe deal with, bringing our running cost per laptop to USD 2,994.13.

Next, we need to add another 3% shipping fee from South Africa to Harare, Zimbabwe. This brings our running cost per laptop to USD 3,083.95.

Our laptops are now in Zimbabwe, and fortunately, laptops don’t pay customs duties, but they pay VAT of 14.5% and this adds a further USD 447.17 to our laptop bringing the running cost per laptop to USD 3,531.12

After the taxman’s lion’s share, the retailer adds a markup for their trouble ranging between 20% – 30% depending on the risk. For this example, we will go high-end and apply a 30% markup to come to USD 4,590.46.

In a normal economy, USD 4,590.46 should have been the final price for each of these laptops. Sadly, Zimbabwe’s economy is anything but normal. This is where it all starts to become interesting.

You see, @ReserveBankZIM and local banks haven’t been issuing foreign currency to non-priority sectors for some time now. This led to people using alternative means to acquire this resource. At the time this tender close, parallel market rates were at a record USD 1: ZWL 800.

Page 10 of the tender states that, bids should be priced in ZW$ and foreign currency equivalent at the prevailing market rate. And that payment will be done in ZW$ converted at the ruling rate on the agreed delivery timelines as stated in the contract.

To cater for losses presented by the disparity between the ZW$ parallel market rate and US$ interbank rate, for which payment was going to be made at the date of payment, one needs to multiply the final US$ value of the laptops with the parallel rate of 800 to get the ZW$ value and divide by the interbank rate of July 15th 2022, which was 396.8940 In the end, the final ZW$ value of each laptop will be ZWL 3,672,368.00 and the US$ value will be USD 9,252.77 which is very close to the much-disputed USD 9,264.48 you see today.

Whether we like it or not, Blinart may NOT be the villain here. I would like to think that @ParliamentZim did their adjudication processes and found everything above board. It’s possible that they may have been bidders with lower prices, but got disqualified for non-compliance.

Tenders of such value usually go through the Special Oversight Committee (SPOC) to which every bidder MUST pay a SPOC Administration Fee of typically ZWL 15,000.00, in which in this case, no such payment was asked of the bidders, and I don’t think it went through SPOC.

In conclusion, the noise made since yesterday was caused by government officials that are not actually in touch with the realities of the country that claim to serve.

@ParliamentZim made the mistake of reacting by cancelling the tender which it professed had gone through internal processes and SPOC. They should have defended their internal adjudication processes and shed light on how the decision was reached with the backing of the SPOC.

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