CDEDI echoes President Chakera’s calls for policies to protect local construction companies from abuse by foreign firms

The Centre for Democracy and Economic Development Initiatives (CDEDI) has echoed President Dr. Lazarus McCarthy Chakwera’s call for the development of deliberate policies to protect the local players in the construction industry, observing that the local players are at the mercy of foreign firms.

Recently, President Chakwera ordered that foreign companies awarded construction contracts in Malawi should award 30 percent of the projects to the local contractors.

He also ordered that all international bidders should allocate 30 percent to local contractors when accorded an opportunity to manage projects through a thorough process.

Executive Director Sylvester Namiwa

The President said he had taken this step to protection exploitation of the local players by foreign contractors.

Addressing journalists in Lilongwe on Wednesday, CDEDI Executive Director Sylvester Namiwa said there is rampant financial discrimination in the construction industry in Malawi, with foreigner-owned companies enjoying the biggest share in contract awards.

Apparently, a survey by CDEDI has established that Roads Authority (RA) awarded ‘almost all the contracts’ to Chinese Government-sponsored companies thereby putting local companies at a disadvantage.

Namiwa released findings from the review of the contracts at a press briefing he held in Lilongwe on Wednesday.

He claimed that from Marka in Nsanje to Meru in Chitipa, everything is in the hands of Chinese firms.

“The Chinese government sponsored companies are creating advantage and, in the process, killing the competition by quoting prices that are lower than the engineers’ estimates. Our prediction is that in five years’ time after successfully killing the local contractors, the Chinese are likely to raise the prices to recoup all they invested in this scheme.

“The Chinese, unlike their European counterparts, use the cheapest bids as a strategy to enter the African market, while companies such as Starbag use high quality strategy. It all started like this in the neighbouring country Zambia,” he said.

Namiwa said there is a need for the Malawi Government to intervene on the rates to make sure that local contractors should work for a profit in the subcontracts since the current rates do not even accommodate a break even.

He also recommended that the current bidding system should be changed and that RA should be sanitized by removing those that were hired by politicians to advance political agendas.

“Let professionals that can defend their actions or inactions work on behalf of Malawians, and not foreign and political elements. The RA officials should not be allowed to get away with their deliberate mistakes that end up costing the taxpayers billions of Kwachas. A platform should be created for linkages among service providers and the RA to avoid cases of multiple contracts, duplication and/or conflicts in the project implementation.

“Contractors found deliberately contravening the contractual agreements, creating situations that end up in delays and price escalations should be held accountable for their sins and should be made to pay or should be deregistered,” said Namiwa.

In a summarized report, CDEDI makes several other recommendations, including the need for political parties to adopt the lobbying policy as is the case in United States and the funds realized should be invested even if it means buying shares and setting up companies; after all the monies will be spent here unlike the case where our hard-earned taxes are used to build the already strong economies.

It also calls for the consolidation of project screening, an independent team of engineers to set engineers’ rates reflective of the real situation on the ground so that the subcontracting should be a reality.

“There is a need for a public infrastructure master plan so that projects should be predictable, unlike being at the mercy of politicians. Uniformity in the way project supervisors are treated either in donor funded or taxpayers funded projects. There is an urgent need to revisit the project return periods in the face of climate change and heavy deforestation that forces rivers to change their course now and again,” reads the report in part.

The organization further advises the government to adopt international standards in handling project supervisors, so that they should not rely on the very same contractor they are policing for transport and other amenities that compromise their independence.

“An engineer should be involved at every stage of the project right from inception to handing over. The Malawi government should turn to the East Africa model, especially Uganda where governments challenge a contractor to do the design, construction and maintenance of the project for about 10 years before handing it over,” stresses CDEDI.

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