Editor's Comment

Contract law long overdue

A PART of the Kawambwa–Mushota road under construction. PICTURE: VIOLET MENGO

WE ARE taken aback that some foreign contractors are, some with impunity, excluding locals from contracts.
This is despite the policy being very clear on what should be done to involve locals.
Participation of local contractors in the execution of high-value infrastructure projects in Zambia is among Government’s priorities.
This is because Government is cognizant of the fact that there is no country that has ever developed without the involvement of its citizens.
The rationale is simple: if Zambians take part in high-value infrastructure projects most, if not all, of the revenue earned is reinvested into the economy.
This certainly plays a role in revamping the economy and uplifting the living standards of citizens.
On the other hand if such contracts are awarded to foreigners, the money realised is externalised for the benefit of their countries.
While it is not possible to completely do away with foreign contractors because of the expertise, equipment and financial resources they bring along, mostly lacking among the locals, there is certainly need to strike a balance.
As a way of striking this balance, Government formulated a policy which stipulates that a minimum of 20 percent of all Government-funded road contracts awarded by the Road Development Agency (RDA), Local Road Authorities (LRAs) and other Government institutions should be executed by Zambian citizen-owned companies.
This is in line with the shareholding structure specified in the Citizens Economic Empowerment Act No. 9 of 2006, whose overall goal is to contribute to sustainable economic development, by building capacity in Zambian-owned companies.
The 20 percent sub-contracting policy is applicable to all civil works exceeding K30 million. Contracts below the ZMW30 million thresholds shall be reserved for citizen-owned, citizen-influenced and citizen empowered companies in line with the Citizen Economic Empowerment (Preferential Procurement) Regulations of 2011.
Through this policy, Government aims at empowering Zambian citizen-owned construction firms as well as creating sustainable local contracting capacity.
It is also Government’s desire to see local firms upgraded on NCC’s grading system.
This is why we are taken aback that despite the existence of such a policy, foreign contractors have continued excluding locals from contracts.
They have greedily held on to the 20 percent which is supposed to be subcontracted to local firms according to the subcontracting policy.
Unfortunately, a policy only gives guidance on what contractors ought to do according to set standards but does not compel them to abide.
This is why we welcome pronouncement by the Minister of Housing and Infrastructure Development Ronald Chitotela that Government will soon make it law for 20 percent of all major road construction contracts to be subcontracted to Zambian firms.
We are happy that Government has already set the ball rolling with the Amendment Bill for the new legislation expected to be tabled before the current sitting of Parliament.
It is also good that under the new law Government is considering raising further the threshold from 20 percent to 30 percent to compel all major contractors to give a considerable stake to local firms.
“What we want is local contractors to legally own the percentage of all major contracts and not as it is currently,” Mr Chitotela said.
This is indeed the way to go if Zambian construction firms are to be empowered and citizens’ lives uplifted.
There is no other way of ensuring development in Zambia if not by empowering local firms through a fair stake in contracts and capacity building.
It is also heartening to hear that the Zambia Public Procurement Authority (ZPPA) Act will be amended to compel major contractors to bid together with local ones so that the contracts are awarded as joint ventures.
This will no doubt compel foreign contractors to work with their local counterparts for fear of losing out completely.
While Government is working so hard to empower local contractors, we expect them to reciprocate with a sense of responsibility and hard work.
Local contractors need to rise up to the challenge and prove that they are worth the 20 percent stake in projects or even more by delivering quality works and on time.
Formulation of the law does not mean local contractors will get away with shoddy works and irresponsible behaviour of abandoning projects.
Actually the law should ensure that such misfits are dealt with decisively.

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