Using the mail merge wizard I tried to import recipients from my collegues contacts folder in Outlook who is on our office network but I could only access my own contacts at this stage. How can I mail merge using my collegues contacts folder in Outlook?

Take a look at the security settings for your colleagues contacts. The chances are you need to have permission to access the contacts folder. You may need to ask your system administrator to give you a hand if you are not familiar with this aspect of outlook.

Are you using a Microsoft Exchange server, or just stand alone outlook?

Another way you could get access without the security aspect, is export the contacts to a CSV or Excel file, and then point the mail merge to that file. No secuity issues in that solution.