South Sudan vows to strengthen capacity of local contractors

By Ngor Arol Garang

September 20, 2011 (JUBA) – The government of the newly established Republic of South Sudan said Tuesday it was committed to strengthening the capacity of local contractors but only if they unite to successfully undertake large projects.

The Central Equatoria state governor, Clement Wani Konga, while laying the first foundations of an office for a UAP insurance company office in Juba on Monday, said his government, in collaboration with investors, was planning to only higher large construction companies with adequate capital, human resources and technology.

UAP’s managing director Patrick Kanyingi said the company has two building projects in Juba one at Kololo and another at Malakia near Hai Neem costing a total of $19 million.

The UAP building at Kololo will cost take $4 million. The second construction which will be five floors at Malakia near Hai neem be bigger and cost at least $15 million to build Kanyingi said.

The managing director said the project would help create employment opportunities to the citizens of South Sudan in general and citizens of Central Equatoria State in particular.

Governor Wani, whose speech was broadcast on South Sudan Television and Radio on Tuesday, explained that his administration was developing policies and plans which would support local residents in Rual Mafi residential area to and other areas in the town to relocate so investors with capital get the opportunity to develop the city.

He denied allegations from the local contractors that government at all levels favour foreign companies in awarding tenders for construction projects without giving priority to local contractors.

“The government has always wanted to assist local contractors but the problem has always been with local contractor themselves. Only very few can afford to undertake huge developmental projects. Most of the time the government tries to contact local contractors before so as to see how we could help you join forces and take part of the big projects,” said Wani responding to allegations from local contractors who said they were being sidelined.

He argued that some projects like construction of schools are funded entirely by domestic resources.

“Some projects, especially those connected to construction of schools, are very urgent and required speed and accuracy to meet demands of the government for students to start going to school,” Wani argued.

Many business groups from the newly born nation of South Sudan have told Sudan Tribune that despite the construction sector being regarded as one of the fastest growing industries in the country, it is dominated by foreign companies. Companies from the US, East Africa and Asia countries get jobs above local contractors, South Sudan companies say.

Dut Chol Awac, the owner of the New Sudan Investment Company Ltd, which specialises in roads and bridges construction, hotels, government offices, provision of furniture among others, said he has had difficulties getting direct contracts from the government despite displaying the capability of his five year-old company.

Awac, acknowledged that some contractors do not have capacity to undertake huge construction projects.

“Yes it is true some of the contractors do not have capacity but what about those having capacity to exert execute development projects. My company was one of the first few companies which delivered food to various locations in South Sudan to the army without seeking any advance payment […]. We purchased and delivered everything from our own operation budget”, he said

But Abraham Mabor, Director General for roads and bridges in the former ministry of roads and transports – which is now awaiting restructuring having been split into a new ministry of roads and bridges, dams, electricity and transport after independence – said most of the local contractors are crowded in low level contracts because most of them either lack technical capacity or the resources to undertake projects worth more than $10 million (26.7 million South Sudan pounds).

“The sector is highly fragmented with the majority of the contractors being sole businesses lacking business culture and unable to undertake huge projects,” said Mabor. He pointed out that unless local contractors united to form joint ventures, foreign companies will continue to dominate the sector.

According to the former ministry of legal affairs and constitutional development – now the ministry of justice – the number of registered local contractors has increased from 30 in late 2005 to over 506 by the beginning of this year. Most of them do not have functioning offices, the ministry said.

Mabor said the government is keen to assist local companies to undertake huge projects as part of its commitment to strengthening capacity building of the private sector by developing local contractors he said. At present they are a often a one man show with little capital, technology and competent human resources, he said.

“Some of them just complain while they do not have capacity to implement projects. They do not want to unite their resources”, said Mabor.

Officiating a meeting with local business groups, Gier Chuang Aluong, the minister of roads and bridges challenged contractors to form joint ventures and execute big government sponsored infrastructure projects.

“You need to come together and form partnerships so that you can afford to implement big projects,” Aluong told the meeting.

Officials from the ministry of finance and economic planning say construction consumes over 70 percent of the government’s annual budget. With many of the big projects going to foreign companies, the government is forced to pay them in foreign currency which drains the country’s hard currency reserves.

“It’s a real concern for us and we would like to see more money paid to local contractors to contribute to economic growth,” Salvatore Garang Mabiordit, undersecretary in the ministry of finance and economic planning told Sudan Tribune on Tuesday.

Mabiordit pledged commitment of the ministry to implement suggestions brought local companies at a meeting held in December 2010 last year.

“Among other suggestions and recommendations which were made was that the government requested contractors to work as team so that those who do not have capacity to execute big projects can share their resources, especially construction materials including machine with equipments and manpower to implement one project at a time. The intention of the government was to help local contractors be able to access projects with bigger value”, explained Mabiordit

The official revealed that local contractors who attended the meeting want the government to impose regulations which makes it compulsory for foreign companies undertaking government projects to partner with local contractors which should hold at least 50 percent of the stake.

He said the companies also wanted to government to pay them arrears which they claim amount to billions of South Sudanese pounds. The delays have crippled their their capacity, the companies say.

“The local contractors also requested that an interest rate of up to 10 percent above commercial lending rates should be imposed on the government and other institutions as punishment for delayed payment. This was not accepted.”

(ST)