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Beware Of Taxmen Carrying AK47s

Published 6 years ago
By Forbes Africa

Heavy construction in Africa is not for sissies. A myriad of risks have to be dealt with, but it all boils down to three objectives: on time; on budget and on specification.

The route to success is dependent on three more critical aspects for the contractor: good people, good equipment and positive cash flow.

Getting the ‘Three by Three’’ right in Africa’s remotest locations means getting to grips with the risks that can include gun toting taxmen; more of that later.

Take the people: it takes a special breed to leave family behind and spend one to two years away from home, living in basic conditions, working on hot, wet and humid sites where communication is scarce and disease lies in wait.

Many sites are manned by a multicultural workforce. Providing traditional foods, ethnic, cultural and religious harmony is essential, and it happens all over Africa every day.

It’s the mosquitoes that get our people though – much of Africa is stricken by malaria and the good people we send to sites sometimes come home sick. It never really leaves your body and repeat infections are common. No amount of spraying work sites, medication, nets, creams, counseling and behavioral discipline guarantees immunity. In addition, if you are HIV positive, malaria is a death sentence – we voluntarily screened our workforce for HIV. The counseling was the tough part. Medical evacuation in severe malaria cases, and for other life threatening ailments, is a critical service that gives peace of mind to families back home. It’s the people that make for successful projects – mind the mozzies!

That said, construction leaders in Africa are a special breed and relish the exotic destinations they call home for a year or two. They love the freedom to operate, the responsibility they have and the life-changing challenges they experience daily.

Border posts are also a problem. Getting equipment across Africa is tough. No amount of planning and preparation is enough; you have to have the right paperwork and physically shepherd heavy plant equipment through Africa.

In my years in African infrastructure, getting plants to site and getting it home again without losing time, or being asked to pay exorbitant unofficial border duties, was rare. Ports can also simply let goods lie for weeks or even months, which piles stress onto projects.

Transport routes become toll roads as communities set up roadblocks and press for toll fees to allow heavy equipment to pass. Building a power line in Nigeria – a nightmare as the line passed through many communities, each of whom was promised work by the elders – meaning we had to divvy it all up and employ a military guard for each pylon to prevent sabotage.

We even hired nearby mobile police or ‘Mopol’ to ensure people and equipment got to the sites.

It’s a tricky situation which forces you to manage this risk; avoid compromising good governance, yet keeping the project moving.

Avoid all of the above and the taxman can still get you on cash flow and margin. Onerous tax regimes are fueled by hungry economies, fiefdoms masquerading as tax collection centers, corruption and western aid. Efficient tax collection systems are developed to lessen their future aid burden – a costly recipe for great creativity and duress.

No amount of technical competence, good governance, good people and good equipment on site can prevent the unexpected!

In the early years, in one large country struggling to emerge from its war-torn past, where we constructed many successful projects, the tax base was the primary source of regional government income. The published national tax code was the easy part – it’s the governor or taxman who you had to be wary of! The tax assessors would arrive in military trucks, with AK47s, to encourage payment of some creative assessments of the PAYE and company tax. Needless to say, we learned how to deal with this, never paid under duress, but tax clearance can run for years after the jobs were built and that’s an unexpected cost to the company.

Building in Africa? Sounds easy? If you are looking for rewarding challenges, seeing the world, excitement, personal growth and building something permanent –

try it!

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Related Topics: #Building, #Cash flow, #Construction, #Contractor, #Development, #Equipment, #October 2015.