Govt mulls banning foreign contractors

TINASHE MAKICHI

Government is contemplating banning foreign contractors from undertaking local construction projects, a move meant to capacitate the local industry as well as deal with rampant externalisation, Business Times can report.

Multiple government sources said this week that discussions on the matter are currently underway.

The latest development comes at a time Zimbabwe’s construction industry is in a precarious position, with most players living on the margins. The sector requires at least US$350m to sustain their operations this year.

In the past few years, the government, which provides over 70% of construction work in Zimbabwe, has been battling funding. The government has been awarding lucrative tenders to foreign companies especially the Chinese, who in turn bring in labour for menial work from their country.

This situation has led to retrenchments, downsizing of operations, and closure of a number of local construction firms.

However, the foreign contractors, especially the Chinese, have been accused of externalising cash. They are said to be flooding the parallel market, with local cash, partly paid to them by the government, to source foreign currency.

Sources said this has been one of the reasons why the parallel market has been thriving despite the existence of the foreign currency auction system.

“If you check some of these foreign contractors receive part of their payments in local currency and that money is then channelled through the parallel market to get foreign currency. This has been a headache for the central bank and there are ongoing discussions around restricting participation of foreign companies in national projects,” an official at the Reserve Bank of Zimbabwe (RBZ) who preferred not to be named told Business Times this week.

The Zimbabwe dollar continues to lose value on the parallel market. This week the dollar was trading at ZWL$150 on the parallel market from about ZWL$130 last week.

The government is now seized with the matter and wants to correct the situation.

The local players are also vigorously pushing for protection from foreign contractors.

Transport and Infrastructure Development Minister Felix Mhona and RBZ Governor John Mangudya were not picking calls yesterday.

The push to restrict foreign contractors comes as local companies have successfully undertaken government projects, especially in the rehabilitation of road infrastructure triggering calls within government corridors to protect local contractors.

A number of local contractors including Fossil Contracting, Masimba Construction, Exodus and Company and Tensor Systems, Bitumen, are rehabilitating the Beitbridge -Harare highway.

“There are discussions in that direction at the moment. The issue is more around building local capacity. Harare Beitbridge road rehabilitation has shown us that if given the opportunity local companies can undertake these major projects,” a government source told Business Times.

Construction Industry Federation of Zimbabwe CEO Martin Chingaira referred questions to the organisation’s president Christian Matope.