21 June 2018

Tanzanian Contractors Keen On Joint Ventures With Foreigners

Dar es Salaam — Contractors are seeking joint ventures (JVs) with foreign companies which operate in Tanzania, targeting a minimum 30 per cent return from the projects they carry out together.

This, they say, should help them to grow - arguing that joint ventures, if properly managed, would go far in improving the operational capacity of the locals to such an extent that they would reach par and be able to successfully compete with most foreign companies in securing construction jobs in the country.

Noting that "Class-I foreign construction companies nowadays take up projects with a value as small as Sh200 million," the contractors argued that such contracts should be left to Tanzanian companies in the interests of the 'local content' concept.

"While keeping us internationally compliant - and not restricting competition from international contractors - the local content policy, combined with JVs, would ensure that Tanzanian contractors learn from their foreign counterparts, and grow with each project that is awarded," a board member of the Tanzania Private Sector Foundation (TPSF), Mr Dhruv Jog, said in an interview with The Citizen.

"We look forward to seeing the Tanzanian flag flying at all major construction projects being executed in the country," Mr Jog further said.

Statistics show that, in June 2010, there were a total of 3,252 registered civil and building contractors across Tanzania - a number which had doubled to 6,826 by June 2017.

Only 78 out of that number were foreign companies. However, the foreigners secured contracts worth a whopping Sh3.81 trillion in the 2016/17 financial year out of the Sh5.5 trillion-worth in total of the civil and building construction projects that were registered during that financial year.

That was equal to 69 per cent of the total value of the entire construction industry that year.

"Even if we are to remove the mammoth standard gauge railway (SGR) construction project, the total value of contracts registered in FY-2016/17 is Sh2.8 trillion - out of which projects worth Sh1.1 trillion were undertaken by foreign contractors.

Again, that was over 40 per cent of all the registered projects, minus the SGR project, of course," the TPSF board member, Mr Jog, lamented.

TPSF executive director Godfrey Simbeye called for the government to implement the local content regulations of 2004 in procurement of construction projects.

He also called to the National Economic Empowerment Council (NEEC) to make sure the local construction sector is able to maximize on the growth opportunities that existed by participating in all major construction projects.


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