Nigeria's Construction Industry Bill

30 Nov 2012

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Global Finance: By Odilim Enwegbara

 Without indigenous ownership, our construction industry will remain undeveloped 

Not only were the cars looking like an ashtray with four wheels. Being poorly made, no one seemed ready to waste their money on a car from a country known for its mediocre products. And with such a very poor outing, these eyesores were quickly withdrawn from auto dealers in America and Europe. So, the ensuing debate among top government officials became: ''What next after 25 years of injecting public money and protecting it at home through high tariffs''?

Three divergent opinions emerged. One — and which was the most dominant — called for the immediate return of General Motors and Ford kicked out of the country 20 years earlier. Two, more in the middle, demanded that the car company be returned to its original business of making simple textile machinery after all, the country was still a major silk exporter. Three — made up the very fierce advocates of economic nationalism — strongly voiced the need to continue supporting the carmaker notwithstanding its abysmal outing and the near bankruptcy of the infant auto company.

At the end, the economic nationalists' superior argument that ''no country has ever gotten anywhere without having serious industries such as automobile industry,'' eventually won. Therefore, supports from the government continued to ensure that the carmaker could eventually make better cars like ones made by western automakers.

The year was 1958; the country Japan; the carmaker Toyota; and the substandard cars Toyopet. To help Toyota emerge as a national automaker, GM and Ford were kicked out of Japan in 1939 by Japanese government. Having received public money and protected with high tariff walls, still unable to fully stand on its own feet, it went through several years of trial and error and from one costly failure to another before the maker of the rejected Toyopet could finally find its feet. This time, not as a mere follower of leading automakers like GM and Ford, but leading them in their own game of auto-making. In other words, Toyota super-luxury Lexus became the car everyone dreamt driving; and Toyota City an awesome sight people have to spend a great fortune around the world to just see.

Reflecting back, one wonders what would have been the fate of Toyota today had the Japanese government not kicked out the two giant American automakers, or had the government succumbed to the pressure of free-trade, free-market! Had puppets of GM and Ford prevailed, shouldn't GM and Ford still dominate the Japanese auto industry today? Were Japanese leaders not patriotic and nationalistic enough to stand with Toyota all the way in its difficult times, would Japan have escaped the trap of exporting silk, not to mention becoming the world's super-luxury automaker?

Today, Nigeria's infrastructure industry remains at a crossroads. It is at a crossroads because government policies all these years have favored awarding foreign construction firms contracts instead of developing and growing their national counterparts. In the meantime, foreign construction companies have done everything to ensure emerging indigenous construction firm were never allowed to stand on their feet.  Should we then hope that there's a future for indigenous companies in Nigeria's construction industry with foreign companies controlling and stifling them away? 

The beauty of democracy is that it is far-reaching with wide-spread power. But that only happens when it's fully mobilized. The good news is that that very far-reaching power is actually in our hands. Besides being the custodians of our nation's economic and political sovereignty, we are the true voices of the people whose interests we are elected to represent. It is time to come up with a bill that should give our construction companies and hundreds of thousands of our unemployed engineers that sense of responsibility that comes with sense of ownership.

Like the boldness of those fearless Japanese nationalists who in other to pave way for the development of their national auto industry, had to take some drastic measures, including sending foreign carmakers packing, today finding ourselves at the same precarious situation, it is our patriotic responsibility to boldly consider the Construction Industry Bill timely.

Focused on reducing the overbearing influence of foreign construction companies, this Bill in widening and deepening local content, will give our indigenous construction companies that level playing field, that sense of fairness, and that sense of ownership that decades of preferential treatment given to foreign construction companies by governments after government have denied them. With the bill made law, besides witnessing unprecedented capacity building in our construction industry, there will be far-reaching industry-wide trickledown effects. 

The main goal of the CIB is to make it completely illegal for government in Nigeria to award contracts to any foreign construction company contracts paid with taxpayers' money. It is only by making it illegal that the nation's construction industry should expect serous attraction of local investors, who have been pursued out of investing in the industry as foreign investors make it unattractive for them.

In addition, CIA will ensure that not even an indigenous construction company with more than 5 per cent expatriate work force or more than 3 per cent of its profits repatriated overseas should qualify as an indigenous construction company, or be allowed to participation in public construction contracts. Also the new law should come with the full overhauling of our country's construction industry in a way that makes it attractive to genuine and better organized indigenous construction companies. 

In setting new standards for the country's construction companies, the new law should clearly stipulate stringent conditions for the registration of construction companies in the country. The current rampant failures in the industry, mostly caused by inadequate capacity and poor financing, should be addressed by the new law, which should go as far as banning 'one-man' construction companies as well as preventing indigenous construction companies that lack management and financial robustness from participating in government contracts.

The new law should make it mandatory for registered indigenous companies participating in government contracts to also demonstrate their candidacy for public offering — becoming a public liability company.

For the new law to ensure increased transparency and accountability in the processes of awarding government contracts, e-contracting should be made compulsory. A national e-contract database that fully captures profiles of all companies wanting to participate in government construction contracts should be comprehensive enough to include the biodata of the board members and management teams. The full history of all the captured companies, including their past contract performance records should be fully documented and made available for public viewing. Should a construction fail to meet these conditions, particularly denied the national database membership, such a company automatically is disqualified from participating in any national e-contract.

But for any e-contract award to be declared legitimate, its recording processes should cover contract award documented, involving compulsory audio-videoing as well as online posting of all the documented processes for the Nigerian people's viewing, evaluation, and commenting.

Appraisal of all e-contracts should, as a matter law, be conducted in fully televised kind of town-hall meetings. Also, all e-contracts should be accompanied with performance bonds provided by the contract winners, so that should they ever default in their performance bonds (and depending on the level of default) repays government losses. In other words, any e-contractors found wanting should not only have their e-contracts revoked, but also should be as a matter of law blacklisted from future public e-contracts.   

The new law should also mandate federal government to quickly establish the Nigeria Civil Engineering Construction Company (NCECC). Modeled after the Chinese Civil Engineering Construction Corporation (CCECC), NCECC should be focused on turning itself into a giant national construction few years down the road. As a fully indigenous construction giant, NCECC should be the melting pot for our country's finest engineers and other construction professionals in road, airport, seaport, waterway, railway, and dam construction work and maintenance.

Besides NCECC, the law should also direct the Nigerian military to come up with how to establish the Nigerian Military Engineering Company (NMEC). Like NCECC, it is expected to become a giant national engineering company with sole responsibility in building the country's sensitive infrastructure such as government buildings, prisons, nuclear power plants, as well as developing the long overdue Nigerian Military-Industrial-Complex. 

Also to be given birth alongside will be the National Construction Industry Inspectorate (NCII). Populated by some of our country's best construction project management professionals, the Inspectorate will be fully responsible for maintaining transparency and accountability in publicly funded construction projects across the country. Unannounced, Inspectors will visit construction sites across the country and document how good or bad the work is being done. And should the Inspectorate find any construction company's work wanting, the Inspectorate should initiate the process of revoking such a contract. And for this reason, all construction companies should also register the NCII. 

Tags: BACK PAGE, Business, CCECC, Featured, Ford, GM, NCECC, NCII, Nigeria, NMEC

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