$245M Roads project Eludes local firms

Local contractors are expected to miss out on projects of the construction of the four road projects under the Millennium Challenge Account (MCA-Malawi’s)  $350 million transport corridors compact.

The $245 million road construction component of the compact covers a combined length of 285 kilometres with the roads to be constructed in Lilongwe, Mchinji, Kasungu, Mzimba, Rumphi, Ntcheu and Mangochi as the compact aims to develop four new agricultural production and value-chain corridors.

MCA-Malawi chief executive officer Dye Mawindo said in an interview that local companies are expected to find joint venture opportunities for the major road projects or be targeted for the upgrading of feeder earth road projects that have a combined length of about 370 kilometres.

“Most local companies cannot handle an 88-kilometre road construction project. They don’t have financial muscle and equipment and we have very limited time,” said Mawindo.

The road projects will be executed in three years, according to Mawindo, with contract awarding to be completed by November, as the whole compact has a limited timeline of five years with a clock clicking since May 6 when the compact came into force.

National Construction Industry Council (NCIC) chief executive officer Gerald Khonje acknowledged that local contractors struggle to participate in foreign-financed projects not due to lack of technical capacity, but that some project conditions prove restrictive to them.

He explained that depending on project structure, it may have certain conditions that are not related to perfomance but such conditions may not be favourable to local companies.

“Donor-funded projects have conditions that sometimes are prohibitive to local companies. In some situtations it is the issue of cashflow where local companies fail to demonstrate the capacity, not that they can’t execute the project but they may not have the cashflow required as a condition,” said Khonje.

He admitted that there is need to invest in capacity development of the local construction industry to be able to take up foreign-financed projects, saying the country loses out when such projects are taken up by foreign companies.

An attempt to speak to Malawi Business Contractors and Allied Trade Association president Wickly Mhango proved futile as he was engaged.

But Khonje outlined some areas that would help to develop local capacity and those include the legal provision to have local particiption for all construction works that are executed by foreign companies.

He also suggested putting into law the aspect of nationalisation of equipment imported for publicly financed projects upon completion of the projects.

“This can be put in the projects during concept development stage to incorporate the provision that ensures that equipment procured for that particular project remains in the country when it’s finished,” Khonje said.

He further explained that such equipment can be placed at Plant and Vehicle Hire Organisation or at the NCIC for local construction companies to access.

“We’ve done that before and it worked out very well. We just need to incorporate such conditions in the projects,” said Khonje.

The first MCA project, the power compact, had civil and electrical engineering works that were overly taken by foreign companies as the projects were tendered globally for internationl bidding, a scenario that is expected to recur as the MCA will be issuing tender notices mid this year.

The land corridor compact has three components that include the road construction, land reforms for the seven benefiting district councils and all the city councils to improve their land-based revenue collections and management and the private sector support component.