Corruption bleeding Zimbabwe’s economy

Source: Corruption bleeding Zimbabwe’s economy | The Financial Gazette June 9, 2016

LAST week, the Minister of Transport and Infrastructural Development, Joram Gumbo, announced that his ministry was on the verge of signing a deal with two China-based firms on the Beitbridge-Harare-Chirundu highway dualisation project.
The two are financier, Geiger International, which is insisting on coming with its contractor of choice, China Harbour Engineering Company (CHEC), in tow.
Geiger International is an Austrian project financier based in China while CHEC is a subsidiary of State-owned China Communications Construction Company.
Gumbo had more announcements to make … the dualisation of the 900-kilometre highway is now finally going to cost a cool US$2,71 billion.
It is the same project that started at just over US$800 million, then doubled to US$1,5 billion, then ballooned to US$2 billion, then to US$2,2 billion, before it finally arrived at the current price tag of US$2,7 billion.
At this construction cost, this translates to US$3 million per kilometre — three folds the World Bank maximum — making the Beitbridge-Harare-Chirundu highway dualisation project one of the most expensive in the history of road construction.
Instead of taking his time to justify the record figures, Gumbo was quick to justify the sudden urgency on the road.
“It is really urgent that we dualise the Beitbridge-Harare-Chirundu highway because it is the shorter route inland and for exports from South Africa,” Gumbo said.
“So we are being pushed by the fact that if we don’t act, we will lose out on transit revenue because South Africa and Botswana are already working on that corridor linking Botswana and Zambia through Kazungula Bridge.
“So the good thing is that the financier has mobilised the funds and the contractor is there. So finally we are going to see work happening. Serious discussions for the dualisation of this road have been going on for years, which is not good for investment. We need to move things the moment we decide to do something,” said Gumbo.
One thing Gumbo could not say was that the same contract he is now in a hurry to give to the Chinese firms at more than three-fold the original cost was recently wrestled from a consortium of local construction firms that had won the tender to dualise the road for a bid of US$883 million.
Had the government not interfered with the consortium, the project could have been completed more than 10 years ago.
Gumbo also could not tell anyone that this time around, the project did not go through the normal tendering process.
Just a few days after Gumbo’s announcement, it emerged that the favoured contractor CHEC is currently under a World Bank ban for tender- rigging and fraud.
The Beitbridge-Harare-Chirundu highway dualisation project is just but one of the key infrastructure projects that the Government of Zimbabwe is suddenly in a hurry to implement that the standard tendering processes appear to be cumbersome.
As if the country is at war, only a few government mandarins have of late been arrogating themselves the right to decide what is best for the country, even in decisions with far-reaching effects.
This way, tenders for major infrastructure projects such as power generation, dam construction; airport upgrading; road and rail construction and rehabilitation, among others are secretly dished out without the public knowing how the winning companies would have been chosen.
Only in February this year, the Ministry of Local Government, Public Works and National Housing announced that is was partnering with China Communications Construction Company Limited (CCCC) for the construction of the Harare Drive South Ring Road, a massive project that involves the construction of a 27,1 km stretch of tarred road consisting of four lanes with a width of 31m, six underpasses, seven bridges and two vehicle bridges.
The ministry did not say how much the project would cost, or how CCCC had been selected to do the job.
A 2013 research conducted by Paul Collier from the Centre for the Study of African Economies at Oxford University, through the assistance of researchers from two other universities on the cost of infrastructure development in developing countries, cited corruption as the number one problem.
The report said in some cases, bidders actually offer officials who are in position to influence the outcome of the biding process anything up to 15 percent of the project value in kick-backs, amounts of money that could be too tempting to resist.
“Public work contracts, including roads, are subject to substantial levels of corruption. According to Transparency International’s Bribe Payers Survey of over 3 000 business executives worldwide, public works contracts and construction is the sector with the highest propensity of paying bribes to officials and other firms,” Collier said in the report.
From a cursory survey at most major construction projects done in Zimbabwe in the past 15 or so years, indications are that there is a huge difference in costs between private and public projects, with the latter tending to cost inordinately more, possibly an indication that the final bill could be including more than just the cost of the actual infrastructure development.
In 2001, a private mining firm, the Zimbabwe Platinum Mines (Zimplats) contracted a consortium of construction firms to construct a world-class road to link its mining operations in Mhondoro-Ngezi with its processing plant in Selous.
The consortium, made largely of local construction firms and going by the name Ngezi Joint Venture Project, quoted the mining firm just over US$19 million for the 78 km road — the only one in Zimbabwe with capacity to carry 100-tonne road trains — and because any delay was going to attract a hefty daily penalty, the consortium completed the project which it had promised to undertake at a speed of one kilometre per day, ahead of schedule.
This was the same consortium of largely local contractors who built —from scratch — an 80-km all-weather highway for Zimplats for less than US$20 million, that re-assembled to form ZimHighways, the company that in 2003 won the bid to dualise the Beitbridge-Harare-Chirundu highway, something that gives an indication of how the consortium ended up coming up with a US$883 million bid.
Suddenly that same project — without going through an open tender process, is now going to cost more than three times more, raising eyebrows as to what really could be taking place.
Analysts this week pointed out that as much as government officials might appear to be doing things in the public’s interest, the fact that the same public is kept in the dark as to what would be taking place behind the scenes provide fertile ground for corruption.
Farai Maguwu, the director of the Centre for Natural Resource Governance (CNRG), a civil society organisation, said when one mega deal after another is negotiated and sealed under the cover of total secrecy, there is real possibility of the current leadership entering into corrupt and unsound deals that could result in them leaving a legacy of heavy debts that could take several generations to clear.
“Avoiding the tender process is meant to favour some undeserving entities or simply to avoid competition. Corruption large on these deals. It seems the government in its current state has compromised its own institutions to an extent that no one can hold the other accountable… each project is an opportunity for ‘our turn to eat,” he said. Muguwu blamed Parliament for allowing such practices to flourish.
“I also think Parliament is letting the people down. These crazy deals must bring Parliament to a standstill. It is not asking for too much to ask the responsible Minister to explain why a simple tender procedure is not followed.”
Economist and opposition politician, Tapiwa Mashakada, who was the minister for economic planning and investment promotion during the 2009-13 inclusive government, said the situation had become really bad.
“The following are the challenges that infrastructure development projects face in this country… the tender system is opaque, bids are overpriced, kickbacks are paid, loans are guaranteed by the State without Parliamentary approval and there is no quality control on the projects… look at the shoddy job that was done on the Plumtree-Mutare highway,” Mashakada said.