Online Reporter
WITH its capital allotment, the second largest item in the national Budget after the State payroll, the Government is a major economic force in Zimbabwe and should be able to use that leverage to pursue its priorities and policies.
A lot has been done in recent years to clean up and streamline public procurement, while eliminating possibilities of corruption.
This has seen, for example, those wishing to participate in tenders by State entities being checked out in advance, when the necessary time and trouble can be given without some urgent deadline.
The resulting list of approved companies does distinguish between local and foreign firms and while there is some information on owners and directors, there is no real detail of whether a company is owned by women, youths or war veterans.
So when tenders are advertised, those assessing the responses can just look at the companies and their track record, can assess their competence and then make a final decision, usually on price.
This is fine as far as it goes, but it should be possible to go a lot further to build up local capacity and to give a break to special interest groups that have been excluded in the past.
One problem that emerged in the past over major construction or infrastructure projects was that there was no suitable local contractor, so a foreigner had to be awarded the contract.
In some cases, perhaps many cases, the foreign contractor would hire local workers and sometimes would find it convenient to hire local sub-contractors.
But this could not be enforced, and in any case there was no requirement for technology transfer to local sub-contractors.
A proposed amendment to the Public Procurement and Disposal of Public Assets Act converts what has been best practice by some external contractors to a requirement.
External contractors will be required to hire local sub-contractors where possible and presumably that means they must have a very good reason not to hire one.
But at the same time, there must be technology transfer to those sub-contractors and here we go beyond just hiring a bunch of workers to do something.
We have already seen how successful this can be. An external contractor, Group Five of South Africa, won the contract for the reconstruction of the Mutare-Harare-Bulawayo-Plumtree highway in 2012.
The consortium hired several Zimbabwean firms as sub-contractors and they were able to build up their capacity and equipment, and their skilled staff were trained in advanced technologies, over the lifespan of the project.
When the contracts for the next major highway redevelopment came up, for the north-south link of Beitbridge-Masvingo-Harare-Chirundu, there were external offers that included financing. However, the costs appeared to be outrageous, so the Second Republic, early in its existence, checked out the local contractors, most of whom had built up their capacity as sub-contractors, and reckoned they could do it, with the Government acting as the financier using the road tolls.
It worked as a totally local project.
The local contractors have been able to go further and assemble shorter-term financial packages and we have seen this with the Trabablas Interchange among other projects that are now 100 percent local.
We at present have external companies working on major dams in Zimbabwe.
We hope there is technology transfer and higher-level subcontracting, rather than just hiring of labour, so that we are assembling a group of engineering companies that will be able to bid for future tenders.
The amendment opens a possibility that a local firm can be allowed to win even if its tendered price is not the lowest, although the maximum variation allowed will be set by the regulatory authority.
This needs to be implemented carefully, so that we are not paying for local inefficiencies. Our contractors should be learning how to compete on price as well as quality and be able to win contracts outside the country as well.
Sometimes there might be good reasons, such as higher interest rates on the financial package, or other very good reasons. The regulations on price variance should thus insist on breakdowns of costs and reasons given where there could be a need for a higher local cost.
Generally, the local contractor should be able to assemble a cheaper package, being physically near the site and so while the option can exist we need to watch it closely.
A lot is being done to help empower companies owned by women and youths, with equipment even being handed over, in a revolving fund so it must be paid for in time, to youths.
Again we need to bring these groups more decisively into the mainstream of the economy and we cannot see any reason why there cannot be measures to help them win contracts, although we need to watch any attempts to subsidise inefficiency, rather helping the companies to be efficient.
We need to be careful, mind you, that we look into such companies in some detail, otherwise there will be businesses who think that if they shove a couple of compliant women or youths or people living with disabilities into the front office they can get away with winning special circumstances.
Those who benefit should be the real thing.
In several procurement cases it should be possible to provide help to the groups who we wish to see advancing.
This can be through advice and other practical measures, but we must still insist on price parity and the amendment seems to suggest that a variance from this is not automatic. This again would be better as it would make sure the new concerns were viable within the private as well as the public sector and could take their place on merit within our business world.
But what the amendments seem to stress is that local firms and the businesses of special interest groups, should be given opportunities to develop and grow rather than be granted special favours.
