PPP medium-based urban renewal can readily uplift local contractors

The Guardian
Published at 06:00 AM Jul 02 2024
Deputy Prime Minister and Energy minister Dr Doto Biteko
Photo: DPMO
Deputy Prime Minister and Energy minister Dr Doto Biteko

THERE is now a call to experts at the Works ministry to formulate a supportive strategy for empowering local contractors into smoothly implementing projects assigned to them.

It comes from Deputy Prime Minister and Energy minister Dr Doto Biteko, who made it as what one might describe as a Budget ‘morning after’ gesture – the occasion being a sector symposium.

In a sense, the gesture is part of a package of routine empowerment exercises which have contrasting bearings depending on the group targeted.

First is the group of those ‘excluded’ from the job market though this could be viewed as failure to get jobs because the need for workers is not growing in tandem with output in secondary schools, colleges and universities.

These are targeted simply to get a footing in the economy, with middle-income groups like contractors often complaining of secondary status.

Such groups are influential in society and can lead to a political backlash if they see that foreign companies have the best share of public works to a level they perceive as unjustified.

The government has to find ways of assuaging such feelings as part of policy meant to foster harmony, in which case the contractors/and service providers’ symposium saw the Works ministry being asked to liaise with the Treasury in empowering local contractors with vital facilities.

It is not every formulation the leadership or other sectors of society make about the importance of this or that group in the economy that is totally reliable as a guide to clear comprehension of issues.

Local contractors, much like commercial sector stakeholders recently engaged in negotiations with the government, are important to feelings on how the particular sector is run.

This applies even if it is not necessarily the most technically appropriate group to engage with especially in strategic projects. The problem is thus not their inclusion in strategic projects but availability of potentially profitable projects.

How far the possibility of widening or diversifying credit channels will solve the problem is not easy to say, as either side of the policy issue has its drawbacks.

Not providing local contractors with enough work to do may risk leading to disharmony, while genuine outreach has its problems in that it may not meet required standards in project design or execution.

Also, an overly open-arms policy could be perceived as a political initiative, which could cause challenges to authorities charged with supervision of implementation.

The difficulty about this credit master plan is that it will be hard to align credit facilities with actual contracts, as best practices require that one has a contract and then there is credit.

A major condition for a contract is ensuring quality in technical capacity and equipment along with a sound track record to back it up, meaning that the government would need to widen current PPP programmes to include the uplifting of inner-city roads.

This is talk on a project on the cards for major urban areas, where the government can look for an auxiliary multilateral facility for such works, paid for courtesy of road toll collections at city level, land price rises, etc.

There is little competition from foreign firms in local works, while standards are relatively easy to accommodate.

Local contractors need more of the medium-level works they commonly obtain. But while moving into strategic projects as well may not always yield good enough fruit, that should not be a no-go sphere.