The war for re­sources is FIERCE

Do­ing busi­ness in Africa means deal­ing with jeal­ousy and sab­o­tage from gov­ern­ment of­fi­cials and com­peti­tors, as one South African com­pany has learnt

CityPress - - Business - SIZWE SAMA YENDE busi­ness@city­press.co.za

Simbi Phiri (55) was fin­ish­ing his com­pany’s R400 mil­lion state-of-the-art of­fices when false ac­cu­sa­tions of il­le­gally ex­port­ing in­come gen­er­ated in South Africa to Botswana – al­legedly to cir­cum­vent pay­ing sub­con­trac­tors – began cir­cu­lat­ing.

Phiri has since learnt that the con­ti­nent is a rough ter­rain to do busi­ness in, as “jeal­ousy, envy and sab­o­tage” from com­peti­tors and gov­ern­ment of­fi­cials dom­i­nate. De­spite this, he has not given up on hav­ing his civil en­gi­neer­ing com­pa­nies, Khato Civils and South Zam­bezi En­gi­neer­ing Ser­vices, do busi­ness and ex­pand into the con­ti­nent.

“The war for re­sources here in South Africa and else­where in the Africa is a tough and fierce one,” Phiri told City Press.

“My mother comes from Botswana and my fa­ther is from Malawi, but that counts for noth­ing in busi­ness. My ex­pe­ri­ences have taught me to be com­pet­i­tive as a busi­ness­man,” he said.

Khato Civils and South Zam­bezi’s head­quar­ters are in Midrand, Gaut­eng, and the com­pa­nies make use of the lat­est tech­nol­ogy, worth about R1.7 bil­lion.

Khato Civils spe­cialises in de­sign en­gi­neer­ing while South Zam­bezi pro­vides the engi­neers. The two com­pa­nies part­ner on projects.

Phiri bought Khato Civils 10 years ago, when its Con­struc­tion In­dus­try De­vel­op­ment Board grad­ing was at level four.

He grew the com­pany to grade nine, which means it can be awarded con­tracts worth un­lim­ited sums of money, and puts it on the same level as the big­gest white-owned com­pa­nies.

Khato Civils has been con­tracted to im­ple­ment a R2.2 bil­lion wa­ter and san­i­ta­tion project in Lim­popo’s Mopani dis­trict. It will ben­e­fit house­holds in 55 vil­lages.

In Malawi, the com­pany has been awarded a $500 mil­lion (R6.8 bil­lion) con­tract to source bulk wa­ter from Lake Malawi to sup­ply house­holds and busi­nesses in the cap­i­tal Li­longwe and sur­round­ing ru­ral ar­eas.

There he has also had to con­tend with skul­dug­gery in­tended to sab­o­tage his busi­ness.

Phiri’s com­pa­nies are ven­tur­ing into Botswana, Ghana, South Su­dan, Tan­za­nia and Namibia where they bid for wa­ter, con­struc­tion and toll road projects.

“We’re a South African com­pany be­cause the coun­try gave us a jump-start be­fore the rest of the con­ti­nent did, hence we’ve es­tab­lished our head­quar­ters here,” Phiri said.

“As we go to work deep into the African con­ti­nent, we take our lo­cal engi­neers to those coun­tries and they im­part skills. Right now, we’ve got 33 engi­neers work­ing in Malawi, whose jobs are guar­an­teed. We also build of­fices, as we’ve started do­ing in Botswana, be­cause we want to stay where we work.”

He has ex­pe­ri­enced a fair share of sab­o­tage in South Africa and all the other coun­tries where his com­pany has been try­ing to do busi­ness.

In Malawi, Khato Civils man­aged to set aside an in­junc­tion that was granted against it fol­low­ing com­plaints that it did not com­ply with en­vi­ron­men­tal leg­is­la­tion.

How­ever, it is in Botswana where he has en­coun­tered the most re­sis­tance so far. About a year ago, that coun­try’s cor­rup­tion-bust­ing unit, the Direc­torate on Cor­rup­tion and Eco­nomic Crime (DCEC), got a high court re­strain­ing or­der to freeze Khato Civils’ and Phiri’s ac­counts. This fol­lowed al­le­ga­tions of laun­der­ing money al­legedly gen­er­ated from pro­ceeds of crime.

When these claims sur­faced in April last year, they co­in­cided with Khato Civils’ bid for a 7 bil­lion pula (R9 mil­lion) wa­ter project in Gaborone.

At that time, he had been wrestling with the South African depart­ment of wa­ter and san­i­ta­tion’s paras­tatal, Le­pelle North­ern Wa­ter, to get pay­ment for work done, so he could pay his sub­con­trac­tors in the Mopani project.

Lo­cals, who were un­aware that he was strug­gling to get pay­ment from the wa­ter board, al­leged that he was hid­ing money in Botswana.

What pre­cip­i­tated the DCEC probe is that Phiri un­der-de­clared cash at the Botswana bor­der, which he had legally ob­tained from the SA Re­serve Bank and trans­ported to Botswana in or­der to es­tab­lish a Khato Civils branch in that coun­try.

Fol­low­ing many court hear­ings over the past 17 months, Khato Civils’ and Phiri’s ac­counts, with about R25 mil­lion, were un­frozen. He is now free to es­tab­lish the com­pany’s Botswana branch.

Phiri said the un­der­dec­la­ra­tions of $86 000 and $300 000 were “hon­est over­sights” as he had not been aware that his wife had added more money.

He said he car­ried the cash, in for­eign cur­rency, to de­posit di­rectly in Botswana’s banks, to avoid it be­ing con­verted into pula and los­ing value, which would have hap­pened had he trans­ferred it elec­tron­i­cally.

“It’s the na­ture of the busi­ness that, when peo­ple are dis­ap­pointed about not win­ning a ten­der, they all run to the news­pa­pers and this hap­pens in South Africa, Botswana and Malawi. They also kill each other,” he said.

“Also, there’s too much em­pha­sis on black com­pa­nies be­ing la­belled as cor­rupt. Noth­ing is said about white com­pa­nies that col­lude to be awarded projects when they re­alise that they can­not com­pete. From the Botswana ex­pe­ri­ence we learnt a les­son, and we now have a forex ad­vi­sor.”

Phiri said his com­pa­nies’ suc­cess came from em­ploy­ing the best work­ers and do­ing their best when awarded projects.

“We re­alised our lit­tle profit by fin­ish­ing what­ever projects we were awarded be­fore dead­line. We in­vested in more ad­vanced tech­nol­ogy. For in­stance, we’ve im­ported trench­ing ma­chines. Each ma­chine does in one day what could be done by 20 ex­ca­va­tors. We’ve all the ma­chines we need and can es­tab­lish a site within a day af­ter be­ing ap­pointed,” he said.

PHOTO: SIZWE SAMA YENDE

Simbi Phiri

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