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Volatile currency disrupts projects

THE deepening economic crisis — characterised by a debilitating liquidity crunch, acute foreign currency shortage, low production, dwindling investment and runaway inflation that has surpassed the 500% mark (year-on-year) — has crippled business operations in the country. This has been worsened by the Covid-19 pandemic which has infected and killed thousands of people worldwide. The construction sector has not been spared. Business reporter Kudzai Kuwaza (KK) this week caught up with the Zimbabwe Building Contractors Association senior vice-president Gerald Chipumha (GC, pictured) to discuss various issues, including currency volatility, which has severely weakened the Zimbabwean dollar, the Contractors’ Bill and the coronavirus scourge. Below are excerpts of the interview:

KK: How has the sector performed in the first quarter of 2020?

GC: It has obviously been a bit of a false start to the year 2020 for our construction sector. Following up from the last quarter of 2019, we saw tenders for the rehabilitation of 100km on the Harare-Beitbridge highway being awarded to five local companies which brought about huge excitement for all the local contractors as most of the lucrative projects had been awarded to foreign contractors over the years. The five companies awarded the 20-kilometre projects were expecting to hit the ground running after the 2019 shutdown as this project was promising to be a hive of activity with the intensity required in executing this work.

Unfortunately, this was not to be as the contract sums were quickly eroded by the hyper-inflation being pushed by the devaluation of the RTGS dollar both on the interbank and parallel markets. With such huge contracts being awarded in the RTGS dollar, the contractors are having difficulties accessing foreign currency to avail the machinery and spares required, which are all imported.

However, quite a bit of the work, mainly to the detours, took off to a good start with each contractor having completed the clearing of the first five kilometres of each stretch. The works have, however, literally hit a huge snag as the contractors are still awaiting their first certification for the first chunk of works in order to expedite the purchases of fuel and other resources to keep the work going.

KK: What has been the impact on the construction sector of Statutory Instrument (SI) 142 of 2019 which outlawed the multi-currency system?

GC: There was some confusion prior to the pronouncement of SI 142 of 2019 when the government initially announced that all contracts awarded prior to the pronouncement would be paid at the prevailing interbank exchange rate. The pronouncement had brought great relief to most contractors who were struggling to move back to site as most work had come to a halt.

Unfortunately, soon after this sigh of relief, SI 142 of 2019 was announced and brought further chaos to the construction sector as all projects ground to a halt. Most government departments had to seek budget approvals to meet the cost variations of which up to now most funds have not been made available and projects been put on hold since then.

KK: Has there been progress on the enactment of the Contractors’ Bill?

GC: The record-breaking Construction Bill has probably outlived the careers of most politicians since its initial draft having been crafted in 1998. A bit of the background is that the Bill was initially submitted to the Ministry of Public Works and National Housing for input and approval in 1999 and further submitted to the Attorney-General’s Office in 2002.

It is still unclear how the Bill has sat on the backburner for this long with numerous lobbying attempts having been made over the years by both the Zimbabwe Building Contractors Association and the Construction Industry Federation of Zimbabwe. We are however glad that we then made traction again in 2018 when the current Minister of the then Local Government Public Works and National Housing July Moyo promised to introduce the Bill in parliament by December 2018.

Although this did not happen, he has since facilitated meetings with his legal team to sanitise the grey areas, which has since been done. With the formation of the Ministry of Housing and Social Amenities, the incoming minister, Honourable (Daniel) Garwe, has since promised to push for it to make sure that it reaches parliament by the end of this year.

With all the other professional bodies within the built environment having Acts of Parliament to regulate their professions such as the architects, engineers, quantity surveyors, real estate practitioners and land surveyors, it is paramount that the Construction Bill sees the light of day as it will allow for self-regulation in the construction industry which will allow for better industry standards, development of codes of professional ethics and uncapped innovation.

KK: What in your view needs to be done to improve operations in the construction sector?

GC: In all the strategic sessions that we have had and through member engagements, it is crystal clear that the number one intervention to improve operations in the construction sector is to introduce the Construction Bill as this will bring sanity to the industry. A self-regulating mechanism will definitely improve the way contractors conduct themselves from a more professional approach.

Secondly, it is paramount that we lobby government to engage in joint planning regarding projects of a national nature as this will allow for cost and methodology management to ensure that projects are completed within budgeted costs and time.

The industry needs to adopt and develop relevant construction technologies and software, including Building Information Modelling (BIM) that will see projects being carried out more efficiently with less carbon footprint. Allowing for post-graduate training and knowledge transfer is crucial as most of our graduates from local universities are not getting the exposure of being involved in specific energy/hydro/silo and highrise building construction of which projects have not been carried out in Zimbabwe in a very long time due to the economic meltdown in recent years, yet these projects are being carried out in the rest of the world. Our graduates will then be able to use that experience to execute similar projects at home.

KK: What measures are you taking in view of the Covid-19 pandemic?

GC: The effect of this global catastrophe has obviously crept up on us and although we had heard about it, we did not have the real experience of knowing how quickly it would have the potential to spread amongst humans. Over the past week, we have been engaging as professionals in the built environment through the Zimbabwe Construction Industry Association (ZCIA), a body whose membership includes the Zimbabwe Building Contractors Association (ZBCA), the Construction Industry Federation of Zimbabwe (CIFOZ), the Zimbabwe Association of Consulting Engineers (ZACE), the Institute of Architects of Zimbabwe (IAZ), the Zimbabwe Institute of Quantity Surveyors (ZIQS), the Real Estate Institute of Zimbabwe (REIZ) and the Zimbabwe Institute of Geomatics (ZIG), seeking a holistic approach on how best we can mitigate the further spread of the Covid-19 virus within our sector.

We have resolved that in light of the SI 76 of 2020 Civil Protection (Declaration of State Disaster: Rural and Urban Areas of Zimbabwe) (Covid-19) Notice 2020 and SI 77 of 2020 Public Health (Covid-19) Provention , Containment and Treatment) Regulations 2020 pronounced by the Government of Zimbabwe, we encourage all our members to embrace the recommendations provided for by the World Health Organisation guidelines to mitigate the spread of Covid-19 in the workplace.

These guidelines include reducing the number of workers reporting for duty, practicing safe social distancing, ensuring that adequate personal protective equipment is worn at all times, keeping workplaces and surfaces hygienic, ensuring sufficient sanitisers around the workplace, encouraging our members to provide return transport for their employers from home to work to reduce the spread through public transport and increasing awareness by displaying posters promoting respiratory hygiene amongst other measures.
KK: What plans do you have as ZBCA for 2020?

GC: Our plans for the Zimbabwe Building Contractors Association for 2020 have already kicked off with a strategy review workshop where challenges and mitigating interventions were put forward and adopted. Lobbying and advocacy plans have been lined up, mainly to do with pushing for the Construction Bill to be passed into law by the end of the year and making sure that there are more opportunities to be created for our members that now include women and the youth.

We also intend to grow our training and development department where we intend to carry out more training in the various aspects of construction mainly to emerging contractors, women and the youth. The business arm of our association has also been coming up with many innovative ideas and research which is crucial for our sustainability, which ideas we hope to implement by the end of this year.

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