Fri, 08 Sep 2017 11:58:28 +0000
THE revelation that more than 83 percent of the infrastructure development projects are held by Chinese firms is quite disturbing.
Actually the situation is worse. According to Dr. Francis Ndilila, out of 5, 400 registered contractors in Zambia, about 150 are Chinese and yet they account for 97 percent of the contract monetary value of all the contracting projects. The rest, 5, 250 Zambian contractors share a dismal 3 percent of the monetary value of construction works.
According to Minister of Infrastructure Development Lucky Mulusa, total capital projects to be undertaken between 2011 and 2021 are valued at more than US$20 billion meaning that most of the money is externalised.
It is not true that this vast number of projects being held by Chinese contractors are so complex and beyond the capacity of Zambian entrepreneurs. Many Zambians are quite capable of undertaking some of the most complex construction projects but are letdown by lack of capital for equipment and recruitment of specialised expertise.
Very often, the Zambian contractor will be asked to obtain prohibitive performance bonds and provide his or her own resources for mobilisation and other works.
While the Chinese contractor has access to ready funding from their own banks, Zambians must struggle to make upfront payments which they sometimes lose due to payment delays and sometimes outright failure of government to honour contractual obligations.
This situation has demoralised most contractors who either venture out to other more profitable undertakings or simply abandon the industry.
The truth is that there is very little support of Zambian entrepreneurs, not even the Citizens Economic Empowerment Commission provides incubation support to assist budding business men traverse and navigate complex business issues.
Often they are left to their own devices and ultimately, failure is the result.
Worse still, our predatory banks continue to charge exorbitant rates of industry which bear no relationship to economic circumstances in the country let alone in comparison to contemporary financial institutions in Europe or indeed the United States.
It is not unheard of in Zambia for interest rates to go as high as 30 to 40 percent while developing countries are in single digit figures.
The excuse that rates are high because of the danger of default is self-defeating and at the same time self-fulfilling because these rates are unmanageable and appear tailored to incapacitate local entrepreneurs.
We therefore agree completely with sentiments expressed by President Edgar Lungu on the need for banks to charge reasonable interest rates commensurate with rate of inflation, as well as general macro and micro economic stability.
We urge Mr. Mulusa and his colleagues in Commerce, Industry and Mining to seriously consider a programme of incubation to enable local entrepreneurship to rise and blossom if Zambia is to benefit from its abundant natural resources which can be processed into fine products.
It is bad enough that Zambians have to stand by while foreign contractors hold all the lucrative projects when they as indigenous people built this country’s infrastructure to the level that it is today.
Time has come that we should take pride to improve and promote local entrepreneurship through deliberate steps embedded within contracts to provide for skills transfer that incorporates apprenticeships.
There is need to reverse the drain because Zambians have the capacity to work and develop infrastructure. They have done so before and will do so in the future.
All they need is a chance.
