The status of local participation in the construction Sector: To what extent are Zambians building Zambia?

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By Contact: Mwaka Nyimbili
Centre for Trade Policy and Development
Phone: +260 211 264409|+260975876038
Fax: +260 211266234
Plot 123, Kudu Road Kabulonga
www.ctpd.org.zm
Wednesday 13 Januaryn 2o21

The status of local participation in the construction Sector: To what extent are Zambians building Zambia?

By Wakumelo Mataa
CTPD Researcher-Public Finance

Over the recent past years, the Government of the Republic of Zambia (GRZ) has continued
to implement an ambitious infrastructure development agenda in line with its short, medium, and long-term development plans.

However, the Centre for Trade Policy and Development (CTPD) notes that it’s one thing to ‘build Zambia’, and quite another thing to have Zambians significantly participate in ‘building their country’.

The Centre has noted with great concern that Zambian contractors have continued to receive lower valued projects such as road maintenance as opposed to construction.

The 20 percent sub-contracting policy aimed at increasing local participation, in its current form, only seeks to increase the number of sub-contracts awarded to local contractors without any regard to
the value of these contracts.

Further, it is our considered view that local contractors, to a
lager extent, do not have the capacity to compete for contracts with their foreign counterparts on account of some peculiar challenges they face which includes limited access to plant and equipment, limited access to lines of credit, few skilled personnel, limited
roadwork experience and poor construction management and organization skills.

In view of the foregoing, CTPD observes that “Zambians are not adequately participating in building Zambia.” Moreover, given that most of these projects are financed through debt, the continued dominance of foreign firms in the sector externalizes a considerable
proportion of funds from the Country and thus makes it increasingly difficult for Government to raise enough domestic resources to pay back debt and support other programmes.

Government should therefore scale-up efforts to increase the capacity of local contractors through skills development, skills transfer, and increased access to finance.

There is need to extend the 20 percent sub-contracting policy beyond road construction and
Contact: Mwaka Nyimbili
Centre for Trade Policy and Development
Phone: +260 211 264409|+260975876038
Fax: +260 211266234
Plot 123, Kudu Road Kabulonga
www.ctpd.org.zm

Transform it into an enforceable law in order to enhance monitoring and compliance.

Furthermore, the policy should be enhanced by attaching a value measure as opposed to a quantity measure. In its current state, foreign firms will have an incentive to sub-contract low-valued projects to local contractors while retaining high-value projects.
CTPD learnt through a recent assessment of the construction sector that from 2017 to 2018, the number of contracts awarded to local contractors declined marginally, falling by 1.4 percent to 336 in 2018 from 349 in 2017, relative to the decline in the number of contracts awarded to foreign contractors which contracted by 6 percent to 73 in 2018 from 93 in
2017.

However, over the same period, the value of contracts awarded to local contractors
dwindled by 47 percent to K15.3 billion in 2018 from K29.1 billion in 2017 where as the value of contracts awarded to foreign contractors rose sharply by a staggering 63 percent to K30 billion in 2018 from K11.6 billion in 2017.

Issued: By Wakumelo Mataa
CTPD Researcher-Public Finance
Editor’s Note
The Centre for Trade Policy and Development (CTPD) is a not- for –profit, membership based trade policy and development think tank.

The organization was established in 1999 and existed as the civil society trade network (CSTNZ), until 2009 when it was rebranded as the Centre for Trade Policy and Development (CTPD).

The mandate of CTPD is to influence pro-poor trade and investment reforms at national, regional and multilateral levels as well as facilitate the participation of various stakeholders including member organizations in ensuring that trade is used as a tool for poverty eradication.

For more information you can Email:info@ctpd.org.zm. or Visit our web site [www.ctpd.org.zm]

You can also follow our TWITTER Account -@CTPDZambia Address:

Office Plot 123, Kudu Road Kabulonga
Contact: Mwaka Nyimbili
Centre for Trade Policy and Development
Phone: +260 211 264409|+260975876038
Fax: +260 211266234
Plot 123, Kudu Road Kabulonga
www.ctpd.org.zm