AfricaLive talks with Mongezi Mnyani of South Africa based Khato Civils regarding the company’s recent successful infrastructure projects in Botswana, their blueprint for expansion into new African markets, and the challenge facing the continent in ensuring Africa’s infrastructure is built by Africans and with maximum benefit for African communities.
In this illuminating discussion, Mr Mnyani highlights the mistake made by many multinational companies operating in Africa that leads to conflict on the ground and, often, to project delays or failure.
The discussion also highlights the potential in putting knowledge transfer and local entrepreneurial development at the heart of African infrastructure development.
Are we approaching Africa’s infrastructure development in a manner that will leave a social and economic legacy? What role can infrastructure firms play in uplifting communities? Read this interview and AfricaLive’s Infrastructure Report to explore these issues.
AfricaLive: What have been the major milestones achieved by Khato Civils so far in 2021?
Mongezi Mnyani: Our notable achievements recently are those in Botswana where we just completed the two pump station projects in Phikwe as well as the 100km pipeline project.
Building 100km in five months is no small feat considering we also had to build inlets and chambers. The pipeline project was special because it took us out of our comfort zone and also allowed us to test our capacity as a company.
The project made us re-evaluate how we do things to build more effectiveness. We had to create a round-the-clock system that involved day and night shifts. Our good relationship with suppliers helped us deliver the projects in record time and I’m happy to say that we relate well with suppliers both in Namibia and South Africa. Suppliers ensured we had the right quality materials that met specification. Our engineers and other working staff also applied themselves well to ensure we remained on schedule.
Our other achievements include our ability to train and deploy Batswana locals to various roles in our projects. We kept them motivated by paying them after completing certain parts of the work allocated. This strategy worked well for us because it deterred cases of absconding from work. We also had four teams on-site which created competition among the workers and that worked well for us. Our work was made easier by the cooperation and understanding of the client as well. Decision making on their part was very quick, and they had their engineers on-site as well to help us deal with any challenge.
The project is 99 per cent complete now and we are pumping more and more water every day. We have completed the beta-testing in the pipeline project and we should be handing it over by early July. It’s a huge milestone for us because we have shocked a lot of doubters and proved our ability to deliver major infrastructure projects. Representatives of the client and members of the press have access to the site and so far they are all very impressed.
The project will ensure water flows into the ever-growing city of Gaborone and its environs.
Throughout the project, we never lost sight of why we were selected as the contractor of choice. We wanted to display our expertise and our technological capabilities.
Most people were not aware of our technological capabilities so they were pleasantly surprised when we deployed that to maximum effect. We had a good supply of pipes from South Africa that saw us transport about 5000 pipes to Botswana from September last year to February this year. We also imported valves from the US and we learned a lot from a logistics point of view.
AfricaLive: There is a frustration in many African markets when the local labour force is excluded in favour of imported, temporary workers.
What approach did you take when hiring local staff and what approach will you take in this regard when you take on projects in other countries?
Mongezi Mnyani: Our approach was to reduce cases of conflict as much as we could. Our recruitment system had to change and become more inclusive.
We ensured that we had workers from each village where the pipeline was crossing through. We had to train all the recruits because some had not worked on such a project before. We have adopted a policy that ensures we hire locals wherever we work. We can’t just parachute our staff from site to site without being sensitive to the employment needs of locals.
Yes, we might have to bring along some skilled workers, but semi-skilled and labour services have to come from local communities.
We subcontracted small services to local companies so that we not only have as much co-operation as possible, but we also do right by the people. Consultation with local leadership is also key so that we can involve all the important stakeholders as we move in to execute the project.
Consultation with local leadership could mean talking to traditional leaders, councillors, members of national assemblies and community leaders. Consultation can be very complex and time-consuming, but it is all worth it to eliminate any problems along the way. This is our process everywhere we go and we don’t intend to change it.
AfricaLive: What were the initial expectations in the 100km pipeline project and what has been delivered?
Mongezi Mnyani: We had an agreement with the client that would see us take three months to do the designs and 12 months to do the construction. Water will run throughout the system by the end of June. We were expected to deliver the entire project by the end of July this year, yet we will be ready to commission it by the end of June or early July. Our client is aware of this because we hold progress meetings every week.
As we speak, the water is flowing into 50 per cent of the system and in the next week, we should breach the 70 per cent mark. I am certain we will be at 100 per cent by the end of the month. This was achieved thanks to the dedication of everyone involved and all of their skills. At the moment, we are doing small tests to ensure valves are working and all systems are ready to go before commission day. We are done with all the earthworks and major installations.
AfricaLive: As we have discussed, Gaborone is a growing city with the potential to develop into a regional economic hub. How will your project impact Botswana both economically and socially?
Mongezi Mnyani: I expect the impact to be huge because this is almost a one billion Pula project. Suppliers in both Botswana and South Africa have benefited immensely from our activities over the past few months. Most of our pipes, steel and valves were procured from South African companies and we also invested a lot in the economy of Botswana.
Aside from the imports, we procured cement, food, accommodation, laundry, semi-skilled work and other services from Batswana vendors over the months. Over 500 hundred local labourers have done work with us over the months, and that shows our level of investment into local communities. Our contribution to the economy is thus very clear and the government of Botswana is very serious when it comes to keeping money flowing within the country.
Once the water starts flowing throughout Gaborone thanks to our project, economic growth and social development will follow.
During the project, we identified several tributary projects that could be worked on along the way. We believe in investing in local communities as we pass through. A lot of the tributary projects we did were suggested by local community leaders with one being the construction of a house for a destitute family.
We also did a classroom block in Phikwe which pleased a lot of people in the area. The cost of such tributary projects is wholly on us; none of it is passed to our clients. For us, it’s about not only completing contractual projects but also leaving a good name and a lasting legacy.
AfricaLive: How do you think the completion of this project will impact your profile as a company going forward?
Can this act as a springboard for involvement in further infrastructure projects across the continent?
Mongezi Mnyani: Part of our philosophy is to have 80 per cent of our business in other parts of the continent and only 20 per cent in South Africa. The Botswana project is a big leap towards that direction and we have received a lot of positive press.
Observers within the sub-Saharan region have seen that we have the capability and capacity to do such a major project. We are already in discussions with people from Lesotho, Eswatini and other markets to the north.
We are on the verge of securing the funding needed for a Malawi water project we were awarded back in 2017 and when we do we will begin immediately. Our task here is to build the water infrastructure that will see water flowing from Salima to Lilongwe which is some 124 kilometres.
We will use the Botswana project as a blueprint for the work in Malawi and then will roll out further projects across the continent. The Malawi project should begin around September this year and we will move ahead quickly.
AfricaLive: How do you plan to work with local firms and what value will you bring in such relationships?
Mongezi Mnyani: Khato Civils cannot do everything alone, we have to work with others to make significant gains.
We believe in the value chain. We have to properly investigate the local market and see who can provide value to our projects within any region we are working in.
Client needs are of paramount importance and we must bear that in mind when we go into any partnerships. The Botswana project demanded that we have at least 30 per cent of the work done by a local company.
We adhered to that and even subcontracted some more work to other local firms. 80 per cent of the subcontractors we worked with were from Botswana and we did this to ensure that the local economy benefited from our work.
We will look to help develop the expertise of local firms while also giving them much-needed experience.
AfricaLive: Africa’s annual infrastructure financing gap is now estimated to reach up to 108 billion USD. Investor appetite to fund this gap exists.
The challenge lies in connecting finance with projects and people able to execute these projects.
What is Khato Civil’s role in unlocking investment to fund Africa’s infrastructure development?
Mongezi Mnyani: With the pandemic still with us and the global economy on a downturn, investors are very selective about where to direct their money. The real challenge is that investors are holding on to their money when African countries are doing everything to build up infrastructure.
If you look at most of the major projects happening on the continent you can see countries have to get creative when it comes to attracting funding. There must be a clear value proposition and return on investment promise so that wary investors can feel at ease. Governments must also create a conducive environment built on stability and non-interference from the government.
Institutions like the African Development Bank, The Development Bank of Southern Africa and many governments across Africa will have to deal with high demand for project funds. National governments will also need to package the projects in a way that attracts investors as these investors want certain guarantees around their return on investment.
Clearly, it is fundamental that as business we steer clear of any malpractice or corruption cases. We must go further than that though. We must take responsibility to ensure that communities benefit from our involvement and not just a few politicians or business owners.
Building a strong reputation upon a base of good governance, project delivery and impact in communities will attract financiers as they become convinced the risk versus reward ratio works in their favour.
Governments must put together attractive packages that will showcase their countries as attractive investment destinations. We must show investors why African markets are competitive investment destinations when compared to places like Southeast Asia where investor confidence is already high.
There has to be a clear roadmap that involves all the stakeholders and assures investors that money will be deployed prudently. An appetite or lack thereof for working with institutions like the World Bank and IMF will also be a factor if infrastructure projects are to be expedited. These giant financial institutions can contribute positively to infrastructure rollout by pressing ahead and funding projects. However, they can also contribute negatively by delaying projects through overly stringent conditions to financing.
Of utmost importance for African governments is to be able to assure investors that they will make worthwhile gains in the next ten to fifteen years if they provide their capital. We must model our proposals in a way that shows both the scientific and technical data that justifies the viability of the projects.
AfricaLive: Statistics from the Africa Development Bank show that local companies continue to be sidelined in favour of multinational or foreign firms in Africa’s infrastructure rollout.
What would the ideal balance be between local content companies and international players?
Mongezi Mnyani: Botswana is a country we can all learn from when it comes to local content policy. 30 per cent of the projects must be done by local companies and that is non-negotiable in that country.
I am a big believer that we must legislate to arrive at the destination we want to be. Financiers like the World Bank must also be sensitive to that and have such structures observed in their contracts.
Change is required at the top – at the level of the IMF and World Bank – to ensure Africa is built by Africans and that projects have a legacy of employment creation, skills transfer and community impact.
Often the international financiers will insist on work going to European or Asian firms. This is counterproductive. African firms have the capabilities to deliver and the understanding of how to work with local communities.
Multinationals must be sensitised to that and must share some of the work with local companies. The local companies must be evaluated for their scope and quality of work as well. The local content provision must begin at the tendering stage with an identified local company already decided on. Failure to do that should mean possible contract cancellation. Once the legislation is done, cabinet ministers and other officials must work to enforce it. I also have to say that local partnerships must be substantial and done on equal footing. We can’t afford to be bit-part players in our projects, we must work on a level playing field.
The IMF, World Bank and other bodies must also take up local content as policy and stop imposing contractors on Africans. In our case, we are contractually obligated to work with Botswana based companies and that is how it should be.
Doing this will eliminate cases of foreign workers working on all the big projects we see in places like Mozambique and Zimbabwe. Companies like Khato Civils must advocate for local content policies while also educating our governments on the need for this. We are pro-partnership and we should never accept to be dominated by foreign companies because Africans must be involved in projects from A to Z.
AfricaLive: It is an important point that failure to engage with local communities is not only unethical but it can lead directly to project failure.
Does this failure to involve local firms increase the risk level for investors and multinationals?
Mongezi Mnyani: Yes, you can’t just undermine what local companies can do.
If you show up in these communities biased and not willing to engage, you will fail. In Mozambique for example, we have seen cases of project failure because multinationals had little respect for the locals. It can directly lead to protests, strikes or sabotage of projects.
You should always have a mindset of working with the locals to avoid animosity. If we are serious about the health of the economy, we must accompany aid with capacity development.
The mindset of feeling superior to the locals needs to go if projects are to work properly across the continent.
AfricaLive: In some nations, local content policies are in place to guarantee local participation. Are these policies effective?
Mongezi Mnyani: There remains work to be done to make local content policies work in the real world and not just on paper.
Often, it is a box-ticking exercise. They are not effective in many countries because they are not legislated properly. It becomes difficult to enforce.
Legislation must be clear so that foreign investors are clear on what percentages must be handed to local companies. As Africans, we can’t treat investors like they are doing us a favour. They invest because they will get a return on their investment in due time. Ensuring maximum benefit for local economies and communities must be structured into investment agreements.
Investors, however, do have the right to oversee the projects because it is their money and they must be sure of a return on investment. Clear guidelines on local content must exist for foreign companies to follow. It would be in the best interest of governments and contractors to subcontract locals and make that non-negotiable.
Failure to do that will see locals show up to project sites and cause expensive disruptions.
AfricaLive: Each project which fails to create genuine partnerships is a missed opportunity for knowledge transfer, skills development, local business development and job creation.
How can this wider impact be brought more into consideration for governments and investors?
Mongezi Mnyani: Before partnerships can be formed, there has to be a clear articulation of what the master plan is. Each African country must clearly define its vision and form a core around the vision before forming enabling partnerships. The vision must also be long term with a 10 to 15-year outlook. We must have master plans for roads, energy, water and all other sectors. The master plan must also have a clear model of operation and an articulation of how it will be funded. Once the vision is clear and well-drafted, it can be packed and sold to investors and partners who will then buy-in.
Many African countries have established public-private partnership offices. These should help articulate the vision more clearly. If we set out to build new infrastructure, we must know what that means in every detail. If we are to build new cities, for example, we must ask what the city will consist of and what feasibility studies have been done to justify it. This way investors can buy into projects more easily.
We must also make public-private partnerships less restrictive to keep investors interested. Companies must also position themselves to thrive while working with the government and other stakeholders.
AfricaLive: Would increased skills development and knowledge transfer accelerate infrastructure rollout?
Mongezi Mnyani: Yes, a lot of skill is available locally but needs to be nurtured and modernised. Local companies must focus on skills and look to improve all the time so that they don’t get overlooked because of a lack of skills or technology.
With the pandemic biting, we must organise ourselves differently and employ new technologies. We have trained over four operators ourselves and we keep a budget for training.
Every country and company must put aside a capacity building budget because that is how you grow. Training and capacity development must become key to ensure real empowerment comes to communities. Khato Civils does this well and we also mentor small companies to help them develop capacity.
Most multinationals train local companies just to comply with local content policies. Doing it just for compliance is a recipe for failure. Multinationals must make it part of their policy and genuinely help enhance local capabilities.