Governments all over the world do invest in various infrastructure projects. In 2018 for example, the heads of state of the East African Community (EAC) countries endorsed a budget for implementation of about 200 infrastructure projects.
The budget is to the tune of whole Sh175.5 trillion for a period of ten years. There are many views that can be given on these infrastructure projects. Among these views are those on quick wins from the projects as partly done in this piece.
Infrastructure projects in the context of this piece are public infrastructure both hard and soft. Hard infrastructure are also known as traditional infrastructure. They include roads, ports, airports, railways, dams, power and related structures. Soft infrastructure are mainly related to telecommunication including Internet. These are very important economic infrastructure needed for increasing a country’s productive capacity.
The more the quantity and quality of these infrastructure in a country, the more the development and vice versa all other factors remaining consultant.
More often than not, investment in economic infrastructure is a long term undertaking whose dividends are reaped in the long term as well. If well done however there are a number of quick wins or low-hanging fruits that a country can reap from these projects in the short to medium terms.
It is worth noting that investment in infrastructure stands to unlock a lot of economic growth and development potentials if well done and other factors remain constant. It is an opportunity for several groups to gain from the potential opportunities embedded in infrastructure investment process.
These groups include various companies dealing with infrastructure and related businesses in the long infrastructure value chain with several nodes.
Companies that stand to benefit from potential quick wins and low-hanging fruits include firms producing, selling, transporting and storing construction and related goods and services.
These include those dealing with cement, iron, steel, aggregates, sand, stones and many other construction materials and equipment. They also include those providing various infrastructure and related services in virtually all sectors.
They include agriculture, finance, insurance, hospitality, research, consultancy and many others along that line.
It is also an opportunity for revenue generation for both local and central governments by way of various tax and none tax revenues related to infrastructure development. Apart from taxes, other potential revenues for governments include various fees and fines as well. All these can be very significant quick wins and low-hanging fruits in the short to medium term.
Among key issues of concern in implementation of large projects in Africa – Tanzania included – is the issue of local content.
This includes the extent to which a country’s sons and daughters are involved actively and meaningfully in implementing these projects.
This includes the extent to which local firms are actually contracted and/or subcontracted in implementing these projects. Countries stand to gain more from huge projects the more local content there is in such projects.
It is among strategies for quick wins and ‘harvesting’ low hanging fruits.
This is because inter alia, the more local companies are used in the entire construction value chain and its various nodes, the more jobs are created in-country, more incomes are earned, consumed, saves and invested within the country.
This contributes into host country’s economic growth and development. In the context of this article, the higher the local content in infrastructure projects, the higher the quick wins and more low-hanging fruits. The opposite is true, other factors remaining constant.
Capacity of local firms
What seems to be reasons for rather low local contents in huge projects such as construction ones is inadequate capacity of local firms. In the context of infrastructure projects such as standard gauge railway and oil and gas infrastructure issues revolve around the axis of low capacity of construction and related companies.
These include contractors in various segments such as civil, mechanical, electrical and other works.
They also include firms providing related services such as food, accommodation, financing, security, sanitation and many more. What is needed therefore is for the firms to build their capacities.
This should be accompanied with strategic government interventions in terms of policy, legal and regulatory frameworks in favour of local firms but without compromising quality.
The higher the capacity of local firms the higher the quick wins and more low-hanging fruits. The opposite is true, other factors remaining constant.
Source: The Citizen