SO the local suppliers and contractors have not fully benefited from the US$7 billion-plus which has been poured into North-Western Province in the last 10 years?
This is because they are reportedly unable to meet the increased demand for goods and services from the three mining companies due to a number of challenges they have been facing!
The competitive challenges they face cause them not to fully benefit from the investments since they cannot favourably compete with foreign suppliers and contractors who, obviously, offer competitive prices for the goods and services.
It is sad that despite US$7 billion having been poured into North-Western Province by the mining houses in the last decade the mining suppliers and contractors have reportedly not benefited much from the investment.
It brings us back to the conundrum of what should come first, whether an egg or a hen!
In November last year we asked a similar question following information indicating that local petroleum transporters who had successfully lobbied government to give them more petroleum transportation businesses did not have enough capacity to effectively do the job.
Indeed, what comes first between the need to give contractors and tenders to the local business on one hand and the need for them to have enough capacity so as not to disappoint on the other?
What comes first between the need of awarding of business to local suppliers of goods and services on one hand and the need for effective delivery by them?
What should come first when one talks about the “Buy Zambia Campaign,” for instance?
Independent consultant Rob Gentle said that most suppliers and contractors in Northwestern Province lack technical and financial capacity to meet the requirements of the mining companies.
He said that local suppliers and contractors lacked workers with technical knowhow to produce various requirements needed to sustain mining operations while the high cost of borrowing from commercial banks remains a challenge to them.
Just like the case for Petroleum Transporters Association of Zambia (PTAZ) members, the mining suppliers and contractors cannot fully take advantage of the existing business because of the many challenges.
They are forced to let some of the opportunities go yawning!
About US$7 billion has been invested in various mining activities in the Northwestern Province in the last 10 years, resulting in the creation of three mining companies namely Barrick Lumwana, and First
Quantum Minerals (FQM)’s Kansanshi and Sentinel mines.
The challenges being faced by the contractors and suppliers include the cost of credit which ranges between 30 and 40 per cent, which makes it difficult to sustain the businesses.
Others are said to be the limited pool of skills in that region as well as the tax rate, which is said to be higher compared to other countries like South Africa, where most of their competitors are based.
Indeed, these challenges faced by suppliers need to be addressed if local companies are to explore business opportunities in the mining industry and fully benefit from hosting the mining investments.
Our hope is that the ongoing business policy reforms would be able to resolve most of these issues and help reduce the cost of doing business among the contractors and suppliers in the country.
Further help could come from the local financial sector where the banks should do more to support the local businesses in terms of low-interest loan facilities.
Similarly, the mining investors should also relax some of their conditions to accommodate the emergent small scale contractors and suppliers, who should be helped to burgeon into formidable businesses.
They should not use their benchmarks as a weapon of depriving the local suppliers and contractors of the opportunity to grow their businesses into fully-fledged “hens.”
Otherwise, the advantage of hosting these huge mining investments would not be appreciated by the local people if they continue losing out on the available opportunities.