Saturday, March 2, 2024

Govt, BOCCIM define ‘construction’ differently

Even as the construction projects in the billions of Pula continue across the country, Botswana has no national definition for the term ‘construction.’ This might seem like nitpicking but from the analysis by Botswana Institute of Development Policy Analysis researchers, lead by Gape Kaboyakgosi, this situation presents some difficulties.

Noting that the Botswana Confederation of Commerce, Industry and Manpower and the Government (through the National Accounting System) define ‘construction’ differently, Kaboyakgosi goes on to illustrate how problematic this is. Firstly, “it possibly underestimates the contribution of the sector to the national economy since conceivably it leaves some sub-sectors out of the various definitions.

Kaboyakgosi says that BOCCIM’s loose definition of ‘construction’ shows it to be different from ‘engineering.’ He argues that this is controversial because construction projects entail an engineering aspect. Similarly, he says that the National Accounting System might be undercounting construction since it does not appear to include some of the professions of construction such as quantity surveying.

The second point the study makes is that government does not pay attention to construction as a developmental enterprise.

“For instance, neither Tourism nor Transport is taken as developing sectors, and government has strategies and tactics that it develops and sustains to develop these sectors, as shown by particular attention given by dedicating whole chapters to these in the NDPs. Not so with construction, which government takes just as an input to infrastructure design/construction,” the study points out.

It adds that often government even has to come up with measures to protect industries until they grow sufficiently to compete internationally, where some of the companies are state sponsored; or alternatively to deliberately grow local plutocrats who can then increase the participation of citizen companies and increase the likelihood of retaining the proceeds of the industry in Botswana.

At the behest of the Ministry of Infrastructure, Science and Technology, BIDPA is currently conducting a study on Botswana’s construction industry and participated in a stakeholder conference that was held in Gaborone last week where it presented its preliminary findings. Kaboyakgosi says this consultation exercise was part of the methodology and the study is continuing.

The industry does not get a clean bill of health and the study details a long laundry list of areas that need to be cleaned up. Although Botswana has thousands of construction companies, the study identifies lack of competition as one of the challenges facing the industry. Naturally, this begs the question; how is this even possible?
It is possible, Kaboyakgosi says, because one too many big projects are concentrated in very few hands.

“While such concentration in itself does not say there is abuse of dominance, one wonders why it is so difficult for local contractors to enter the market. Is it because they are competing with better sponsored internationals? And then again there is the fact that once the big contractors who win most of the tenders have won these, they then escalate the prices and projects end up being very costly and thus the public is the net loser,” he argues.

“Some of the price escalations are really huge, you have to agree. And the costs are not only financial, as, for instance, there is very little occurring by way of skills transfer, or foreign direct investments while some of the structures collapse soon as you finish them”.

At a time that resources are scarce, government has not been successful in reining in wasteful spending. With particular focus on government institutions, the study found evidence of ‘resource waste/duplication’, ‘clash of mandates’ and ‘role duplicity.’

With regard to wastefulness, Kaboyakgosi says that many of the government projects that are constructed are not necessary and that construction often takes on logic of its own.”

“For instance, when the hospitals in Molepolole and Serowe were built, they were fitted with their own incinerators. Yet the councils in those localities have incinerators that could possibly have serviced the hospitals,” he says.

As evidence of clash of mandates that the study presents is that many government departments act as regulators of the industry while they are also its clients as well as promoters.

One too many laws in Botswana give ministers power over all and sundry. The study makes an issue of ‘ministerial power over technical matters.’ In elaborating this point, Kaboyakgosi points out that in the case of the construction industry, the minister of infrastructure, science and technology is legislatively empowered to overrule boards of directors, which could lead to political interference.
“The boards of directors ought to be the ultimate arbiters in matters of corporate governance since they are made up of technically competent people – hopefully. The minister is not always the expert in these matters,” he says.

Thus far, the study recommends that in order to improve industry performance, there must be an independent statutory agency with an overall view of the industry serving as a regulator.
One of the functions proposed for the said regulator is to carry out global alignment of the construction industry. The study notes examples of countries (like the United Kingdom and Hong Kong) that recently reformed their construction industries.

The latter is an interesting example because of where it is. Chinese companies dominate Botswana’s construction industry to such extent that advertisements and tender documents for mega projects might as well be exclusively written in Mandarin Chinese.

Although a special administrative region, Hong Kong is still part of China. Given the quality of workmanship of some of the Chinese companies that ply their trade in Botswana, one would be curious as to the sort of construction standards that are maintained in the mainland. However, the study did not go in this direction.

“Unfortunately we did not compare with China – which would have been nice I guess,” Kaboyakgosi says.

If the researchers put their minds to it, there may be room for such niceness because the study is continuing towards finalisation.


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