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Obviously, the country does not have the financial and technical resources to pull-off such massive infrastructure projects. Ergo, a huge foreign currency loans Ethiopia has contracted from its major foreign creditor: China. And hence, it comes with the territory that much of this infrastructure projects are contracted out to companies with Chinese origin, and supplies bought dominantly from Chinese suppliers.
With the required technical knowhow, foreign company’s involvement in the major infrastructure projects is a no brainer for most commentators. Nevertheless, with that involvement comes some serious concerns as to the fate of the indigenous companies which are active in the construction sector.
True to form, local companies in the civil construction sector have been at logger heads with the executing authorities. A couple of years ago, in connection to the tender process of the massive industrial park projects in Adama and Mekele, board chairman of the Ethiopian Industrial Park Development Corporation, Arkebe Oqubay (PhD), found himself in conflict with some of the local major construction companies in Ethiopia. At the time, Arkebe and his team at the Corporation was accused of systematically alienating local contractors in the bidding process.
The debate back then was one about fairness and just treatment in international tenders. Local contractors objected steep and stringent tender requirements, which they argued were systematic barriers to keep them out of these projects. On the side of the Corporation, without conceding to any systematic alienation of local operators, argued that weak capacity to deliver these national projects are inherently costly to Ethiopia since these projects are financed by foreign currency loans at steep interest rates.
Surprisingly, electromechanical companies in Ethiopia, which according to some estimates account for 30 percent of most of the construction projects, say that civil contractors had it easy by comparison. For Ethiopian Electro-Mechanical Telecommunications & Electronics Contractors Association (EEMTECA), the status of indigenous electromechanical firms in Ethiopia is much dire than civil contractors.
Yeneneh Dawit, Chairman of the association and General Manager of General Power PLC – an electro-mechanical company — argues that electromechanical firms in Ethiopia yearn for the kind of sector plan Ethiopian Road Authority (ERA) has to develop the capacity of civil contractors. “We know that the authority, benevolently, set targets to develop the capacity of contractors every year; and they do that by ensuring their participation in government road projects,” he said.