Managing Director (SAFRICAS Zambia Limited)

The European and US economies are currently facing some unique challenges, and Asian economies are beginning to contract. Because of this, everyone seems to be looking to Africa as the next frontier for investment. What is your opinion on this, and how do you see Zambia within this context?

I agree with you in that Zambia, in particular, is a country that has great potential at the moment. The reason for this is that, for a long time, we have under-utilized our resources, and now, we have the right leadership in government to be able to do more with our natural resources than we have done in the past.

Government policies are the ones that are creating an enabling environment within the country. In particular, the government’s policy of opening up the country is what will drive most of the economic growth for the next number of years.

The big projects that are going on at the moment—the Link Zambia 8000, and the Pave Zambia 2000—will change the complexion of business for Zambia. Rural areas are becoming more accessible, so lots of viable businesses are now emerging in the rural areas. Rural areas are beginning to contribute to national development more than they have ever done in the past.

Could you please give us an overview of the construction sector? What are the main challenges that you are facing and the opportunities that you are foreseeing?

We need to divide it into the different sectors within the construction sector. The roads’ sector is the one that has boomed tremendously, and this is throughout the country. The big road projects are more or less evenly distributed across the whole country.

It has brought a lot of employment opportunities and business opportunities for the local businesses that supply the construction industry across the country.

The building sector, however, is regionally booming in Lusaka. Plenty of shopping malls are coming up and people are building houses. It does not fully reflect what is happening in the whole country. There are many parts of Zambia where there is very little building construction to talk about. Plus, if you talk about water engineering, water, and sewerage, again, this really has not changed that much at all.

Do you think that the road infrastructure will improve the economic development of all these regions?

That will definitely make a difference. The road sector will help increase the building sector because more people will think of building shops and putting other physical infrastructures in place to make their money in the rural areas,

The main challenge in road development is funding. There are a lot of road construction projects going on at the moment, and they could possibly be completed quicker if we had more funding from the government.

Investment opportunities in the road are private partnership initiatives. Through PPP’s, the country has huge potential.

There lies a huge opportunity to take away the burden the government is paying for with these roads and to take that into the private sector. 

Could you give some background on the company?

SAFRICAS Zambia is evidence of the government’s policy of ‘more money in your pocket’. Part of the whole reason why the government started the whole road infrastructure project was to economically empower the Zambian people so that they have more money in their pockets.

SAFRICAS Zambia is a good example of this working. It started off by partnering with a foreign company, and over a period of time, it acquired shares from the foreign owner and gained the majority shareholding, and now it became a Zambian registered company.

This now creates a new middle class within Zambia. It also creates, within the country, the capacity to do our own roads as Zambia.

Do you think Zambia could be able to transfer its set of skills to the rest of the region?

Yes, it is possible. Although we operate in Zambia, we always look for business opportunities outside Zambia as well.

It creates a new entrepreneur spirit within the country, and therefore, you have a larger layer of construction companies and below that, you have other companies that are working for the bigger companies (the sub-contractors). And under the Sub-Contractor policies of government, the sub-contractors have got to be Zambian as well.  That way, you find that a project like the one I am undertaking in Lusaka will have something like 300 people employed on the project. So there is genuine employment being created and this is benefiting the communities.

It is an opportunity for business people to come and make some money by coming forth to fund these projects. What I think is the real challenge is that of skilled manpower. We have a huge challenge in this area in the country- we do not have enough civil engineers to carry out the projects that we need to do.

How do you handle this specific challenge?

It is extremely difficult, and I do not think that universities produce enough skilled engineers. This is compounded by the brain drain, which has been going on for a long time in this country. Many of the engineers who have been trained in the country have since left to go and work in other countries, and they have not yet returned.

There is a gap in terms of skilled and experienced civil engineers. We only have a handful of engineers, and they cannot meet the demands for the sector. Therefore, many expatriate engineers are hired to come and carry out the work. This defeats the whole purpose of the government spending about 17 per cent of its GDP on roads, which was supposed to benefit Zambians. This has been taken up by the foreigners.

A typical tender document for a road project will require at least four to five experienced engineers, and it is so difficult to find them.

The other challenge is foreign exchange fluctuations. This really hits our sector very hard. Most of our materials are bought from outside the country. Bitumen is the most expansive product and needs to be imported to Zambia. Every time the kwacha depreciates, the roads become more expensive to build.

I think it is time that some investors put up a refinery in order to locally make bitumen here in Zambia. So, these are all opportunities for people to take up.

What about your business turnover?

SAFRICAS Zambia has grown very fast. Currently we have a turnover somewhere in the region of about $18 million USD per year. We will probably finish this year with a turnover of just under $25 million USD.

This is very rapid growth, but the biggest danger being that we are only doing government works at the moment. We need to diversify and target the private sector

Could you tell us more about some of the projects undertaken by SAFRICAS Zambia?

We are constructing a bypass between the North and East of Lusaka. The road starts 7 km from Chongwe East of Lusaka and proceeds through Kazizi, which is North of the Kenneth Kaunda International Airport (Lusaka). The road ends at Great North Road at Kobagwe. With the inclusion of two other projects, the total distance will be 81 km.

We are also working on the Zambezi road and the Caltex road. These roads will feed into the circular road surrounding Lusaka.

Yes, we have done a good job because initially when the project was awarded, there was no design done. However, after the design had been done, the need for bridges and culverts was realized, and this meant quite a lot of work to be done on the same project.

There are a number of construction companies, some of them with very big names. What makes you different from the rest of the sector?

For starters, the company is led by Zambian engineers—Zambian professionals—because we understand the market place really well. This fact is not present in others in the sector. We also spend significant amounts of money to try to get Zambians to work in the Construction Sector.

Does this explain the variance in the quality of the roads around the country?

Yes. A lot of people have successfully undertaken smaller projects, and they really believe they can take on such huge projects. Unfortunately for them, in most cases, they find that they have underestimated the costs of the project, and they are not able to do a good job. Zambia has a huge number of construction companies. The real question is how many of them will survive.

It is particularly brutal in our sector because we have competition from foreign companies such as the Chinese who are also cheaper. They are cheaper because they have cheaper sources of funding. They get money from the Bank of China, which is cheaper than the money we get from our local commercial banks.

However, I welcome the competition because I believe that fair competition can only make the Zambian firms better. The government needs to have policies that still make it possible for Zambian companies to survive. They could introduce some incentives for Zambian firms, and they should be implemented in order to allow the Zambians to survive in this competitive sector.

What are you proudest about in your current position as Managing Director of SAFRICAS Zambia?

I am proudest about our Zambian growth rate. We started as a very small company in Zambia, and then within a matter of months, we grew. And it has been internal growth. So, we have worked hard, and we have grown our company in Zambia through our own hard work. And I think this has been what makes me happiest.

The downside though, is that in Zambia, we need to see more Zambian companies supporting each other-more than what it is at the moment. If we did that there would be more companies like SAFRICAS. For instance, if you go to the banks, it is very difficult for them to give support to a new construction company- one without a business track record. So, if all of these sorts of people worked together, there would be more companies like SAFRICAS.