Statement by the Zambia Chamber of Commerce and Industry (ZACCI)
Statement issued via ZACCI Secretariat. Chabuka Kawesha, ZACCI President
The unfolding road developments through the LINK8000, Lusaka 400-project and Copperbelt 400-Project have pleased the private sector.
The applaud comes on the back of the commissioning of Lusaka’s Makeni road bridge under the Lusaka decongestion programme being funded by both India and Zambia.
Congratulations to the people of India and Zambia. Furthermore we would like to extend our recognition and applaud on the role and impact the India government, Indian financiers and EPC Contractors are playing in the road infrastructure sector in Zambia.
We have seen the opening up of many economic and non-economic roads under the Lusaka decongestion project and this in itself demonstrates that Zambia can structure large infrastructure transactions and see the delivery in a short space of time.
It is equally our hope that all the citizen influenced local contractors and other companies attached to the decongest project have a significant stake within the entire framework. We further call up Government to start drawing up a plan for the country’s next 10,000km post LINK8000, LSK 400 and C-400 projects in which citizen-influenced companies will play leading roles both in modelling, funding and development.
Meanwhile, ZACCI has called upon Government not to delay planned road developments or discontinue advanced old or new road projects but to revisit the implementation model, options and stakeholders on each project on a case by case basis. Let Private Sector Finance Lead Road Infrastructure Development models take root in Zambia now.
The trend toward greater private participation in infrastructure development is firmly established in many developing countries, and the benefits of the initial wave of privatizations and new investment have become apparent.
The move to private infrastructure, launched in the mid-1980s, began primarily in the power sector, especially power generation facilities undertaken as build-own-operate (BOO) or build-operate-transfer (BOT) projects.
More recently, investors have become active in other types of infrastructure as governments promote private involvement in water, transport, and other sectors. As the Country restructures its International Debt assign and reclassify outstanding PPP Road Projects under Private Sector Financing, Concession and Tolling Model.
Private toll road development is experiencing growth on a global scale. The time and cost of implementing concessions and other factors which limit industry activity must be eliminated.
Given that Zambia has accepted and subscribed to the concept and the implemented road tolling trend, a favorable country concession environment can be adopted as this is crucial to attracting financing and limiting the need for government assumption of risk, while an unfavorable environment may preclude financing without substantial government support.
The three principal components of the country and concession environment are the concession policy and process environment, economic and political context, and local capital markets.
Government must enhance the process of transferring capability of road developments to the private sector and focus on compliance and performance standards, maintenance, road tax, street lighting and road safety over and above de-risking investment in the road and transport sub-sectors.
Interest in private toll roads is particularly strong because governments require alternative methods of financing their extraordinary transport needs.
Tolling has also become an attractive option for managing traffic demand on increasingly congested highways. The build-operate-transfer (BOT) model is the most common approach used to assign responsibilities in toll road projects.
BOT is a broadly defined term that includes build-own-operate transfer (BOOT), build-lease-transfer (BLT), rehabilitate operate-transfer (ROT), lease-rehabilitate-operate (LRO), and similar arrangements that are used to develop new facilities or improve existing. Engineering Procurement Construction (EPC)+ Finance is another option.
Zambia is facing dramatic growth in highway needs, both for new facilities and for maintenance and rehabilitation of existing facilities in congested border towns, peri-urban and urban areas and regions experiencing rapid economic and population growth.
And as the is connecting 8 neighbors and the East African access via Mpulungu Port. It is wishful thinking to believe Government can sustain the transit roads. Toll roads require a partnership between the public and private sectors, making the allocation of responsibilities critical for the success of the project.
The expected impact include Public-Private Risk Sharing and Improvement of Government standing in road policy issues. Further its will allow reallocation of Government fiscal resources to the education, health and social sectors. Private tolling is an increasingly attractive option for closing a portion of the highway funding gap.
International Best Practice shows that private tolling is now being pursued in a wide variety of countries, including Argentina, Chile, China, Colombia, Ecuador, Hong Kong, Hungary, India, Indonesia, Malaysia, Mexico, the Philippines, and Thailand. New projects being pursued in France, Germany, Hungary, the Netherlands, Poland, Portugal, Spain, and the United Kingdom.
Delaying or suspending infrastructure development instead of exploring the private sector options is not a solution. It just delays development and will greatly disadvantage Zambia in the Africa Continental Free Trade Area (AfCFTA) era. Zambia’s and SADC growing population and transit traffic can’t be sustained by current in-country road network.
In the ACFTA era construction of road and railway networks as well as telecommunication networks will dramatically open and expand markets and grow business. If we have a cost-efficient and easy way of moving goods to all 8 neighboring countries and Lake Tanganyika that will be a market of more than 210 – 280 million people over the next 10 years for ourselves and those in Southern Africa.
Part of AfCFTA objectives is to address the trading impediments and Zambia’s positioning and ease of passage is cardinal to this continental objective.