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
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.