HOW TO START-UP A CONSTRUCTION COMPANY IN ZAMBIA AND BENEFIT FROM CONSTITUENCY DEVELOPMENT FUND (CDF)

In 2021 during the presentation of the 2022 budget by the Minister of Finance, Zambians got excited at the mention of the increment of Constituency Development Fund (CDF) by the Government of the Republic of Zambia from ZMW 1.6 million to ZMW 25.7 million per constituency. Following the presentation of the budget a few months later in February 2022, the 2022 Constituency Development Fund Guidelines pursuant to section 25 of the CDF Act No. 11 of 2018 and established under Article 162 of the Constitution of Zambia Act No. 2 of 2016, was launched by the Minister of Local Government and Rural Development.

The Constituency Development Fund was introduced in 1995 to enable parliamentarians and local community members choose community projects to be implemented according to their local needs. With the passage of time, the CDF has improved both in scope and extent with revisions of guidelines and increment in value. According to the 2022 CDF guidelines, the scope covers three specific areas; ¹community projects, ²youth, women and community empowerment and ³secondary boarding school and skills development bursaries. Community Projects are the main interest of this article as they address challenges linked with infrastructure development such as water and sanitation, feeder roads, schools, health posts, canals and drainages, bridges, culverts, markets, bus stations, etc.

60% of the ZMW 25.7million is what has been allocated to community projects alone whilst the remaining caters for youth, women and community empowerment as well as bursaries for boarding school and skills development training. The Private Sector and Business Community have been called upon to actively take part in the utilisation of the Constituency Development Fund through supply of goods, services and works, provide technical and professional support as well as offer corporate social responsibility activities. This entails that the government is not just empowering you through loans and grants through the other 40% but it also wants to help build capacity of local companies. To be eligible for supply or tendering for works, you as a company should have capacity to enter into a contract and be compliant with the Public Procurement Act No. 8 of 2020 and any other Acts relevant to the type of works being solicitated by the Local Authority, which is the implementer of all projects under the CDF. It should also be noted that during evaluation of bids, preference will be given to local companies in the ward, constituency, district or province. Therefore, it would be best if you could increase your odds of winning a tender by being enthusiastic about first of all developing the ward or constituency in which you reside. The other way of increasing your odds is by being compliant with all relevant regulating bodies for construction business in Zambia and producing documentation for it for reference during bid evaluations.

To start up a construction company that would in future be eligible to bid for works under CDF, the procedure below has to be followed. The emphasis is on “future eligibility” because it is not all projects that would be given out to a newbie on the market as they would most likely need experience in that area of expertise.

Other than the planning and goal setting for the start- up company, the first thing to do is incorporate your company with the Patents and Companies Registration Agency (PACRA) as a local company under the laws of Zambia. Thereafter, register for Tax with Zambia Revenue Authority (ZRA). For more information on registration for Tax, either visit the ZRA offices or go to their website and other social media platforms. This is a requirement as you will need to present your Tax Clearance Certificate as proof of Tax Compliance to be an eligible bidder for works under CDF. A company has to be professional in all its dealings and one sign of professionalism is opening a Bank Account with any of the Commercial Banks in Zambia. To open a bank account as a company, documentation from both PACRA and ZRA are needed. This therefore shows just how important documentation from these two institutions is. For supply of goods and services in accordance with the Public Procurement Act No. 8 of 2020 as already mentioned, your company needs to have valid registration and certification from the Zambia Public Procurement Agency (ZPPA). Registering with ZPPA online will also enable you have first-hand information on construction tenders running in the country other than those under CDF. As a construction company, you definitely have to register with the National Council for Construction (NCC) and the Engineering Institution of Zambia (EIZ); these are the regulating bodies we have in Zambia for all construction works and compliance with them is non- negotiable if you are to be eligible to tender for any public construction works. Visit their offices or websites for more information on registration. Registration with the Citizens Economic Empowerment Commission (CEEC) established in 2006 through enactment of the Citizens Economic Empowerment Act of Parliament No. 9 of 2006, is also cardinal as it is an eligibility criterion for companies for some projects. This Commission was established to help finance local companies with loans. Most construction works are capital intensive, and it is inevitable that more funds than the company’s bank statement shows would be needed to execute works. This is the reason why registration with a commercial bank is important because it assures the potential client that by it offering you a credit facility, works will be completed. Most contracts for construction works will provide for advance payment but that is only a small portion of what is needed for project completion, you therefore need to show proof that you are capable of financing the project as a company.

Some registrations needed for a start-up construction company

Running a construction company is the same as running any other type of business that will provide employment for the citizens of Zambia. The Government of the Republic of Zambia is prioritizing local companies to execute community projects under CDF because it wants to empower Zambian citizens. Local companies are also therefore encouraged to create employment for local residents; works such as bricklaying, plumbing and general construction works should be given to local residents so that everyone is empowered. As a company, it is important to prioritise the safety and security of its workers on the job. As such, most tenders will require that a company is compliant with Worker’s Compensation Fund Board (WCFB) and National Pension Scheme Authority (NAPSA) for it to be eligible for tendering. A company that looks out for its employees is likely to deliver good quality works because its workers will feel embraced and motivated. Insurance and Legal Representation for a company are also an important thing to consider even though it is not always that these will be among the requirements for eligibility to tender, however, they are very important once you get awarded the contract. Therefore, as a Christian nation and people of faith, registering for insurance and having legal representation is a sign of faith that you would get awarded the contract. Lastly, any business running in the district must be compliant with regulations of its local authority.

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