Road sector confusion and campaign to abolish RDA

Members of Parliament who sit on the Public Accounts Committee (PAC) are familiar with various stakeholders and lobbyists persuading them to take certain stands when they are performing their roles as an oversight and probing duties.

But when senior members from the donor community of Danida and The European Union (EU) made it clear that the Committee should recommend the absolute abolition of the Road Development Agency (RDA) because of a ‘’ damning audit report’’, the MPs were alarmed.

It has now become fashionable for members of the donor community to campaign for the abolition of model and autonomous institutions created to a large extent by donors themselves.

In recent times, Central Board of Health (CBOH) stands as a classic example of a model, autonomous and highly efficient body which was abolished for petty, political and corrupt reasons. While CBOH was a body admired by the Region and credited as an efficient vehicle to deliver health services, the body was dissolved within the help and collusion of politicians and some members of donor community. If fact the dissolution of CBOH cost K400billion and was funded by Cooperating Partners. Today, the health sector is in crisis clogged by corruption and the absence of an efficient health delivery system.

Other social service delivery and social programs bodies that have suffered similar fate are Zambia Social Investment Fund (ZAMSIF), Micro Project Unit (MPU) and the five bodies that were abolished and merged into the Zambia Development Agency (ZDA).

Over the years, the World Bank has imposed structural reforms of government. Donors have convinced us that government ministries cannot deliver social services and this power should be ceded to autonomous bodies while government ministries are left with policy and supervisory functions. It is for this reasons that autonomous bodies have sprung up ran by profession and performing highly better than former government departments.

It’s for this reasons that members of PAC were shocked by this proposal from the EU that is demanding for the dissolution of RDA.

Since then a concerted campaign has been underway with opposition members of Parliament calling for the entire abolition of RDA.

ROAD DEVELOPMENT AGENCY (RDA)

In 2002, far reaching changes were made in the road sector with the abolition of the Roads Board and creation of three bodies; the Road Development Agency (RDA), the Road Transport and Safety Agency (RTSA) and the National Road Fund Agency (NRFA).

Zambia and the cooperating partners comprising; the World Bank, European Commission, Danish Development Agency (DANIDA), Japanese International Cooperation Agency (JICA), Nordic Development Fund, Africa Development Fund (ADF) and Germany Development Bank (KFW) launched the ROADSIP I&II programs to construct, rehabilitate and maintain a core road network by 2013.

RDA was mandated with the construction, rehabilitation and maintenance of the country’s roads infrastructure. RDA is also mandated with the tendering and awarding of road construction deals. It is also in charge of the construction of bridges and other crossings.

The National Road Fund Agency (NRFA) is mandated with mobilizing funds locally and from the donor community and pay for the works. NRFA is in charge of supervising and been implementing the ROAD Sector Investment Program (ROADSIP).

The Road Transport and safety Agency (RTSA) implements policies on road safety, traffic management, registration of vehicle and educational programs.

NRFA reports to Ministry of Finance while the other two report to Ministry of Works and Supply.

The core agency is RDA which manages the 40000 km core road network in the country. Only 22% of these roads are now paved. Roads are a key driver to economic development and economic growth and RDA is at the centre of this need.

In its short life, RDA has scored milestone achievements and has in its short time built, paved and in some cases completed very important and political projects.

Some of the major road works that RDA has handled include roads such as the Choma-Chitongo, the Bottom Road (Sinazeze), Mutanda- Chavuma, Lusaka-Chirundu, Lusaka-Kabwe, Mongu-Senanga, Chipata-Lundazi, Mumbwa-Kasempa, the Mwanawasa Bridge, and the installation of computerized weigh-bridges in Kapiri, Livingstone, Kazungula, Mpika and Solwezi.

Kenya with USD1billion annual road sector budget constructs fewer roads than Zambia which has a USD350million annual budget for the sector.

RDA; CORRUPTION AND THE CORRUPTION ALLEGATIONS

The road sector in Zambia has an annual budget of USD350million (K1.4trillion). Its projects are multi-billion kwacha enterprises and the industry is expected to attract corruption and corruption allegations.

The huge works have mostly been done by a few contractors with capacity for such works. These are Raubex, China Henan, China Geo, China Jiangxi, Sable Transport, and Roads and Pavings.

Raubex, a South African company with a Zambian registered partner Joseph Mwewa were accused of being close to the Mwanawasas. Despite numerous complaints about the quality of their works, Raubex received contracts after contracts. Raubex has done the Lusaka-Luangwa Bridge, the Livingstone Airport, the Kafue-Mazabuka, the Lusaka- Kabwe, the Chipata-Lundazi and numerous feeder roads.

The Chinese firms have not escaped corruption allegations filed against them.

Shortly after the death of President Mwanawasa in 2008, NRFA CEO Raphael Mabenga issued a detailed complaint to donors (uncharacteristic) that RDA had over procured contracts of up to K1.6trillion (in excess of the limit of K600billion in 2008).

Upon completion of works, RDA issues certificates to Mabenga’s NRFA to pay. This has been the problem. Mabenga has instead hijacked the powers of RDA and insists on re-inspecting projects before he can pay rendering the process provided for in the law for RDA, useless.

Correspondence shows that Mabenga has assumed the role of a ‘’whistle-blower’’ and constantly forwarding the details of ‘’suspected’’ payments to donors. If there are suspected payments, a detailed report should be sent to his supervisors- Ministry of Finance and not donors!

When the audits were commissioned, NRFA quickly circulated draft findings to road sector donors!

Mabenga is well remembered for taking his counterpart then, RDA chief, Watson Ngambi to the Drug Enforcement Unit (DEC) Money Laundering Unit, alleging that Ngambi had made a double payment to a contractor amounting to K2.4billion.

Upon thorough investigations that saw Ngambi suffer a highly publicized arrest, DEC found that the so called double payment was in fact an administrative error caused by a new junior who duplicated Certificates for payments. Ngambi was cleared.

Rwanda, the country that is among states in the region that are learning from Zambia on its road sector quickly poached Ngambi for his known expertise and knowledge in the industry.

DEC discovered that Mabenga and NRFA had actually made similar errors. In their case, actual funds in excess of K3billion were released to the contractor doing Chirundu road and reversals had to be done, only upon discovery many days later yet he Mabenga was never arrested.

But tables turn, two years later, Watson Ngambi is the new Permanent Secretary at Works and Supply.

They say a LIE will have travelled half the world while the TRUTH is only putting on its shoes.

THE AUDIT

Mabenga’s allegation that RDA had over procured road contracts in excess of K1trillion has set a vicious process in motion with donors demanding a 3year audit of RDA fearing that Zambia had suffered another grand corruption case involving USD250million.

Since then government were made to commission a forensic audit spanning between the periods of 2006-2009. The audits have involved technical and engineering audits from teams from Europe and Tanzania.

Following the audit findings (although still at final draft stage), President Rupiah Banda has fired Ministry of Works and Supply, Permanent Secretary Col. Bizwayo Nkunika. He has also dissolved the boards of NRFA and RDA.

He has also recalled Watson Ngambi from Rwanda to replace Nkunika.

Despite the pressure, President Banda has not yielded to the campaign spearheaded by Mabenga and the donors to abolish RDA and fuse it into NRFA.

THE AUDIT FINDINGS

The Auditor General using powers vested in her by Article 121 of the Constitution and by Public Finance Act, has commissioned a 3 year financial and technical audit of RDA as demanded by DANIDA and the EU.

The Audit was commissioned to ascertain whether procurement procedures were followed in the award of contracts, if road projects were administered in accordance with contract provisions and whether the expenditure adhered to the law.

In conducting the audit, the auditors tested accounting records kept at Ministry of Works, National Road Fund Agency (NRFA) and at the Road development Agency (RDA)

The preliminary draft findings and inspection culminated in a 300 pages query. After examining documents, contracts and payments vouchers, the Audit has reduced the report to 99 page final draft.

Her Audit Report shows that documents were not properly filed and were not produced for audit or were tendered to her team after the audit.

Her major findings include the over commitment that RDA made to contractors in excess of money appropriated by Parliament. The over-commitment amount is K1, 015,817,097,718 (K1trillion) in 2008. This resulted in cash flow problems for the year 2009.

The Audit also established that RDA signed contracts that exceeded the funds provided for resulting in delayed payments and stalled works or incomplete works.

The Audit also questioned procurement procedures, failure to supervise the works, poor contract administration, irregular payments, and failure to provide progress reports.

The audit established that from its 18 sample projects it inspected, contractors provided shoddy, poor or below grade works.

The Audit also established that RDA is encumbered with a debt of over K300billion carried over from works done before its creation.

The K300billion was taken up by Ministry of Finance yet it the Auditors chose to reflect it in the books of RDA. The works done under the defunct Roads Board were not properly documented and a defective accounting system existed

The Audit also dealt with minor issues such as conditions of service for staff and the sale of personal-to-holder motor vehicles.

The Audit also revealed irregular payments made to the Board Chairman Lisulo Walusiku, for his internet services at his home totaling K2.6million, and insurance cover for personal accident policy for Board members paid to NICO insurance amounting to K37million.

The Audit also revealed irregular use of fuel.

It also shows an outstanding unretired imprest totaling K19billion. This amount reflects monies released by NRFU for RDA’s Regional Engineers across the country to do withholding maintenance work.

Donors had decided to strip all equipment RDA had, insisting that road construction and works will be outsourced from independent contractors. But there are limited and small works such as patching up of potholes and peripheral works that arise time and again and might not require the rigous of RDA’s procurement process.

This retirement of this imprest has been rejected by NRFA because RDA chose to buy tools and equipment such as compactors. NRFA insists this is among the breaches in RDA’s mandate.

In some cases, payments to casual workers have been rejected by NRFA.

For example, the works for the Pedicle Road, tenders showed that it would cost RDA over K8Billion. However RDA chose to use their Regional Engineer to do the gravel works and it only cost the institution K300million.

OVER PROCUREMENT K1.2 trillion

Following the complaint report by NRFA Chief, Raphael Mabenga, circulated to donors that RDA had over committed government to road works totaling K1.2trilion. This amount excited many and caused the commission of the Audit.

In 2008, Parliament budgeted and appropriated for road works a total amount of K685billion while RDA signed contracts totaling K1.643 Billion (K1.6Trillion) resulting in an over-commitment of K1.015trillion.

This over-commitment was caused by RDA being directed to do unbudgeted for roads and bridge works as directed by President Mwanawasa or his Committee of Ministers.

It included works such as the Zimba-Livingstone Road when the road became almost impassable. A Committee of Ministers directed RDA that a 30km section which had presented the worst patch be done as an emergency case costing Euro28million.

RDA was directed to construct and finish the Mwanawasa Bridge in Luapula costing the Agency over K48billion.

The over-commitment is normal in the industry as some road works that are in the annual work plans can be overturned or new projects included as directed.

For instance, the Executive has directed RDA to attend to such roads and sign contracts as Kabompo-Chavuma (K300bln), Mumbwa-Landless (K300Billion), Senanga-Sesheke (K600billion), Chipata-Mfuwe (K190Bln), and Lundazi-Chama-Miyombe-Isoka to help the important link of Eastern and Northern Provinces

Most works planned for in the annual work plan and submitted to government and the donor community will always spill over into the next year.

A new huge road works require completion time of 18months- 2-5years period.

The process is designed to promote accountability but is cumbersome. When a project has been earmarked for construction, RDA comes up with cost estimates and advertises eligible contractors. The adverts have to run for a period of one month as required by the law.

When bids are received, they have to be evaluated and the then submitted to the Zambia Public Procurement Authority (ZPPA). ZPPA also has to sit and approve the winning bid.

Then contracts are entered into between RDA and the Contractor.

Upon approval and contract signing, the Contractor has to be given a period to set camp, mobilize equipment and workers and commence work.

All this might take up to six months.

And then there is a window period for construction as Contractors have to contend with disruption of a rainy season especially for road constructions.

Donors have always complained about this process. It is for this reason that even the Budget Cycle has been changed from October to January to attempt to mitigate difficulties of implementing an annual budget.

But Mabenga and NRFA has not helped matters choosing to put spanners in the works and scandalizing the process as corrupt.

Correspondence between NRFA and sent to the donor community (DANIDA, EU and the World Bank) but not shared with Ministry of Works & Supply, RDA and Ministry of Finance (the parent and reporting Ministry for NRFA), show that NRFA reported the so called over-procurement and sent a summary sheet of road works and projects procured in 2007-2008 and spilling over to 2009/10.

Correspondence also shows that NRFA has chosen to guide donors before any Donor/Government meeting. For example the answer given by RDA on the K1.2trillion over-procurement was dismissed by NRFA insisting to the donors that RDA’s explanation of over-procurement is as a result of the multi-year commitments was not credible.

In NRFA ‘’dossier’’ to donors, they guided the cooperating partners to use provisions of Zambia’s own Finance Act and Appropriation Ac t which prohibits any controlling officer to commit government to expenditure beyond one year, and beyond totals provided for.

Yet government has mid-term and long-term plans that also help provide an important guideline for the President beyond the one year RDA work-plan.

For its projects, RDA receives funding from cooperating partners, Government through its fuel levy and other road users charges. The Road Fund receives and disburses this money and manages the fund as a basket resource.

Zambia has a road network of 67000 and its core road totals 40,000. The work that lies ahead is huge and criteria for which roads should be done in priority differ from the President, Business, Agriculture and Trading sectors. And all these stakeholders are competing for limited funds in the basket resource.

The Audit however ignored road works procured by DANIDA directly. DANIDA gave Raubex USD1million contract (single sourced) to do Luena Bridge in Western Province. Raubex went on the site, changed the design of the Bridge, and changed the scope of work.

DANIDA also hired Zulu Barrow as engineers. The bridge is now showing serious signs of wear yet the Auditor refused to include such works in their sample projects to be included.

The Mongu – Shoprite road was also directly procured by DANIDA but was not subjected or included in the Audit.

CANCELLATION OF ADVANCE PAYMENTS

RDA operations were disrupted and complicated by former Works and Supply Minister Kapembwa Simbao when he banned advance payments to Contractors.

Contractors were forced to begin to secure expensive financing from Banks to complete road works. It meant that road construction works became more expensive as contractors have to factor in the cost of borrowing. This also resulted in difficulties for small and medium scale contractors who had to pledge their personal assets to secure Bank Guarantees.

Why should private Banks pay for the construction of budgeted for public works with secured local and foreign funding?

The Construction Industry is now regulated with the formation of a peer statutory regulator in the National Council for Construction (NCC). If Contractors have acted dishonestly, why not let the NCC takes action and de-lists such contractors than punish the whole industry.

CONCLUSION

Clearly, the road sector is important. This sector is key to the re-election of President Rupiah Banda in 2011.its is therefore strange that donors appear to use the Audit to attempt to close the taps on funding for the sector and use it to abolish RDA.

The startling allegation that a USD250 million corruption scandal had occurred at RDA in 2008 as peddled by the donors has turned out to be a mere cold fact of over-commitment and out-of-work plan contracts.

The measures taken so far by President Rupiah Banda appear adequate but will it forestall the administrative and operational lapses exposed by the Audit.

Any attempts to abolish RDA will bring serious confusion and disruptions to current road projects and the efficient systems designed to deliver successful and gradual construction of a sustainable core road network in the country.

The government should learn from earlier actions made to abolish bodies such as CBOH that have left both government and cooperating partners puzzled by their own actions.

The set-up of RTSA, NRFA and RDA was a good move that require perfection through implementing regular reviews. Since the road sector handles billions worth of contracts, it is important that the Audits findings as revealed and recommended are carried out.

However any attempt to use this Audit to deny the sector funding or use it to abolish RDA will be totally misguided as the Audit Report at both technical and financial is not as damning as portrayed.

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