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A 21st century approach to infrastructure

A 21st century approach to infrastructure

Skills transfer, human capacity development and the creation of jobs are all central to developing an infrastructure industry in Africa that is economically and socially sustainable, writes David Welch*.

The need to provide jobs is widely acknowledged to be amongst the most acute challenges facing governments across Africa right now. Over the first 10 years of Africa’s current economic resurgence, the priority for many governments was to restore and implement emergency improvements to infrastructure with the full knowledge that local capacity was often weak, the ability to arrange financing limited, and the need urgent.

Companies were brought in that offered solutions to these needs; these companies often brought workforces from overseas to complete jobs quickly, and with a low up front cost.

This strategy is increasingly recognised as having run its course. Many of these early projects did deliver, but it has become increasingly apparent that the costs, at every level, have often been far higher than anticipated by many African countries at the time.

Times have changed too. African governments increasingly have the capacity and experience to negotiate better deals, to arrange financing themselves, and the confidence to call in external support to assist in achieving their objectives.

The idea that any one international partner has the monopoly on some kind of ‘special’ understanding of Africa is over. Governments are now looking globally for reliable, credible partners that will deliver to agreed scope, budget and timescale and attract sustainable financing. Most importantly, growing populations with growing expectations are asking that the fruits of Africa’s economic resurgence translate into training and employment opportunities for their people.

Bechtel has been active in Africa for over 60 years, with over 400 projects carried out in 36 countries across the continent delivering every type of engineering and construction project imaginable, whether port facilities in Somalia, pipelines in Tanzania, mines in Zambia, power stations in Algeria, or all of the continent’s existing gas liquefaction facilities. Training and lifelong learning is part of our DNA and our business model thrives on employing and developing local labour wherever possible.

Vast project of national transformation
In Gabon we are working with the government to develop the country’s national infrastructure by establishing a new large-scale infrastructure agency – l’Agence Nationale de Grands Travaux (ANGT). The agency is responsible for setting the professional and internationally accepted standards required to implement Gabon’s National Infrastructure Master Plan.

Absolutely central to this vast and ambitious project is the transfer of skills — and gradually the entire project — into the hands of Gabonese professionals. That way, the project becomes self-sustaining, establishing a globally respected construction and engineering industry that can invest in Gabon and beyond.

Progress thus far has surpassed expectations. Almost two-thirds of ANGT’s 450 staff are now Gabonese nationals, and we are enforcing a 50% local content clause in contracts administered by ANGT, with established criteria for including Gabonese nationals at management level within those companies bidding for work. ANGT has partnered with Gabon’s top engineering university to provide internships for high-achieving students, with 80% so far subsequently recruited to permanent positions, and has led participation in career fairs to attract young Gabonese into the construction industry.

ANGT is also committed to reversing the ‘brain drain’ by targeting and encouraging Gabonese in the diaspora to bring their skills home with competitive international salaries, terms and conditions.

The results have begun to attract regional and international attention. Governments across Africa are attracted by a model that is using local participation as an engine of transformation – attracting respected international companies and investors by providing a reliable and confident partner with a growing track record of delivery.

Gabon is demonstrating that local people can deliver world-class infrastructure to compete with anything in Europe or North America when they are given the time, training and experience required.

Governments are under pressure to deliver skilled jobs immediately, but the government of Gabon has taken a mature approach in recognising that local capacity has to be given the time and support to raise up to the required standards to compete internationally – local content is not something that can be enforced arbitrarily without leading to a serious degrading of essential services that may, in some instances, lead to a downward spiral of declining national capacity. One doesn’t have to travel far to see examples of where this has taken place with disastrous economic consequences.

There are good reasons to believe governments are recognising that there are partners out there, such as Bechtel, which can help to manage local skills development as part of our core business model delivering high-quality sustainable infrastructure.

As in Gabon, it requires a more ambitious, hands-on approach to the delivery of projects than a simplistic acceptance of the first offer of help that comes, or simply running an ill-advised process that produces an apparently cheap product now and which, inevitably, ends up being much more expensive further down the line.

It requires a managed process of skills transfer, designed and provided for up front as part of a package, rather than dropped in as an afterthought or in response to pressure from civil society. Governments and international partners can get ahead of the curve on this – but it takes confidence, investment and informed negotiation.

A realistic assessment of the local markets’ current skill level and mix, combined with a clear vision of where the country wants to be over specified timelines is, in our view, a necessary precondition for establishing the baseline for negotiations on the issue of local content and training. This is not always easy when governments are confronting the expectations of local people and explaining why expatriates are, at least initially, taking sometimes-prominent positions on projects. That is why the private sector needs to become ever more sensitive in understanding the tensions within the markets in which we operate, and the need to balance progress against expectations.

Openness essential
Clear messaging and an openness to engagement is essential – and has been central to the success of the government’s strategy in Gabon. This means that issues of local content and up-skilling are indivisible from the business model, and is why we should take a cautious view of phrases like ‘Corporate Social Responsibility’, which can imply that activities with a social purpose are somehow divisible from the core business case for a project.

Governments increasingly, and rightly, demand that providing for long-term social needs sits at the heart of any large-scale infrastructure project – and we agree. This does not need to compromise the quality delivery of a project – quite the reverse – if handled sensitively and appropriately.

African states are playing in a global competition to attract the best partners, making it more important to develop the right policies

African states are increasingly attractive destinations for the private sector, but as they become ever more integrated into the global economy, African states are playing in a global competition to attract the best partners. This makes it all the more important to develop the right mix of policies to build skills sustainably whilst also developing the track record of successful delivery of projects that will attract the financing such projects depend upon – provided on sustainable terms with no strings attached. Developing and maintaining such a balance can be delicate, which is why engaging with private sector partners with the experience and capacity to support such policies is critical.

Reassuringly, our work in Gabon, and the growing interest from other African governments in studying our work there, demonstrates that African states are increasingly aware that there are solutions available. Certainly, as Gabon demonstrates, with the right partners, African states deserve and can acquire world-class infrastructure and a world-class skills base. As they are beginning to realise, there is no need for Africa to settle for second best.

* David Welch is President, Europe, Africa, Middle East at Bechtel, an engineering, project management and construction company.

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Written by African Business Magazine

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