An analysis of the twenty percent subcontracting policy in the Zambian construction sector: It's efficacy in developing capacities of local contractors

Abstract

The construction industry has been one of the fastest growing industries in Zambia from 2010 to 2014, recording an average contribution of about 9.9 percent of National Gross Domestic Product (GDP). However, there has been an imbalance in the distribution of works between local and foreign contractors. The foreign contractors, who account for less than 20 percent of registered contractors, have a share of over 80 percent of the works contracts. This has been attributed to inadequate financial and technical capacity among local contractors. In order to enhance the capacities and participation of local contractors in construction sector, Government of the Republic of Zambia in 2012 introduced a 20 percent mandatory subcontracting policy. However, most of the local contractors have had complaints on the operation and implementation of the policy. This study therefore aimed at reviewing and analysing the 20 percent subcontracting policy with the view of developing a framework that increases local participation and capacity. Using literature review, semi-structured interviews and questionnaire, the deficiencies and constraints in the subcontracting policy were established. Through this study, it was established that: it would be difficult to grow capacity of local contractors using the policy; policy statement only covers the road sector and was silent on the other sectors such as building and energy sectors; no measures and implementation framework on how the objectives would be achieved had been developed; and foreign contractors were not willing to build capacities of the locals as there was no incentive for doing that. Possible enhancements included: to modify and have an all-inclusive policy on subcontracting; to prepare a strategic plan on capacity building of local contractors with clearly laid out deliverables. Based on the findings, a subcontracting framework which would enhance local participation and increased capacity was developed. The framework could be used to improve the quality and capacities of local contractors.