Local contractors not getting values from road construction contracts, NRFA audit reveals

By MUKWIMA CHILALA

Local contractors not getting values from road construction contracts, NRFA audit reveals

ZAMBIA’S road construction sector has continued to face a major imbalance between the number of contracts awarded to local companies and the actual value of those contracts, with foreign contractors taking a disproportionately large share of public resources.

An analysis of the National Road Fund Agency’s (NRFA) Annual Report shows that local contractors accounted for about 90 percent of the 516 ongoing contracts, with 466 contracts.

Chinese contractors held 38 contracts, representing about eight percent, while other foreign contractors had 12.

But the picture changes when the value of the contracts is considered.

Chinese contractors accounted for about 45 percent of the reported contract value at approximately K35.02 billion, compared with K34.70 billion, or 44 percent, for local contractors.

Other foreign contractors accounted for a further K8.51 billion, representing 11 percent.

The disparity means Zambian companies secured vastly more contracts by number, but foreign contractors collectively controlled a larger share of the money committed to road works.

The trend was also identified by the Auditor General’s performance audit of the Road Fund for 2020 to 2022, which found that local contractors received an average of 91 percent of road contracts, but the value of their contracts remained significantly below that of Chinese contractors.

The audit attributed the gap to limited financial capacity, expertise and technological capacity among local contractors to undertake large projects.

The NRFA’s 2024 Annual Report suggests the imbalance remains.

Local contractors accounted for 203 of 216 ongoing contracts, or 94 percent, while foreign contractors held only 12 contracts.

Yet foreign contractors received K9.93 billion, representing 60 percent of the K16.54 billion total financial commitment, compared with K6.61 billion, or 40 percent, for local contractors.

The figures raise questions over whether Zambia’s local-content policy is translating into meaningful economic participation or simply increasing the number of contracts awarded to Zambian companies without giving them access to larger projects.

Meanwhile, Economic Analyst Henry Muleya says delayed payments by the NRFA are making it difficult for local contractors to access financing and participate effectively in government contracts.

Mr. Muleya says some contractors have waited up to four years after completing contracts before receiving payment, a situation he says is reflected in rising domestic arrears.

He has called on Government to prioritise the payment of domestic arrears, arguing that this would restore confidence among local contractors and enable them to secure financing from commercial banks.