7 Companies Cashing in on Zambia's Booming Road Sector

It is no secret that the Government has made revamping and expanding the road network in Zambia a huge priority. They have staked $5.8 billion on the flagship ‘Link 8,000’ project which is set to improve and expand a road infrastructure network which has been lacking for decades. Two types of companies are winning; the contractors who do the actual construction and consultants who do the design, feasibility studies and supervision of the works.

As  of the July 2014 update from the Road Development Agency (RDA), there were 21 on-going works contracts under phase one of the Link 8,000 project with a combined awarded contract value of approximately K8.15 billion ($1.35 billion) to various companies broken down like this:

Source: Road Development Agency (RDA)

Almost 70 percent of the total phase one contract value was attributable to Chinese contractors with the rest split amongst Zambia, South Africa and Botswana-domiciled companies.

Here are the top 7 contactors making bank with on-going works awarded under the Link 8,000 contracts:

Only one local contractor made the list. Major road works are highly capital intensive and most local contactors struggle to meet the demanding working capital requirements. Those who cannot meet the requirements benefit by sub-contracting from the contractors with the bigger pockets – building walkways, culverts, drainages etc.

The other way in which Zambian firms are benefitting from the Governments road infrastructure drive is through consulting projects. Ng’andu Consulting Limited, a local consulting firm, has been awarded over K60 million in
supervision contracts for various projects around the country. Abel Ng’andu, the Managing Director of Ng’andu Consulting and also Honorary Secretary of the Association of Consulting Engineers of Zambia (ACEZ) said that he
understood the dominance of foreign firms on big road projects but insisted that there is enough capacity by local engineering consultants to take up all the supervision contracts. 
 
He said, “Ideally, all supervision contracts should be awarded exclusively to Zambian firms. Foreign firms already have the advantage of being able to borrow at five percent where as  we borrow at as high as 28 percent, which is challenging”. As things stand, works, design and supervision contracts are open to both domestic and foreign firms.

There is still well over $4 billion of works project to be awarded and done in the next phases Link 8,000 over the next 5 years or so. It will be interesting to see if the above list has any new additions.