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Labour-based Road Construction (SME Support Programme)

In the interests of bringing income and employment opportunity to underdeveloped areas, labour based construction is often used for rural area roads and bridges. It does not usually reduce the cost, but increases the economic and social impact of the road development programme. A comprehensive programme developed in Namibia is highlighted below. Namibia is a large, arid country with a population of about 2 million persons. Transportation is costly because a small population is widely dispersed. Nevertheless, the north is a populous region linked by main corridors, but few community access roads. The labour-based programme has been adapted to the needs and strengths of the local economy.

Following a good experience with labour-based rural road construction in the 1990s, Namibia has developed a comprehensive programme over the past 3 years. It is funded under the Rural Access Roads and Poverty Alleviation Programme of the European Union and administered by a unit of the Roads Authority. The National Development Plan provides road indicators and National Master Plans prioritise road investments every 5 years and determine those to be developed on the labour-based model.

Work is planned for each day in 5 hour cycles and workers are paid a set amount for completing assigned tasks/outputs each day. Generally 30-40% of labourers are women. Workers handle movement of earth and gravel to build the road bed and prepare the culverts, drifts and drainage. Compacting machinery is brought in by the main contractor to complete the road work. Workers are supervised by SME contractors who provide the shovels and basic tools. Because SMEs cannot afford the heavy construction equipment, the core contract is with a major road construction company.

To strengthen the local SME contractors, the Roads Authority provides a training programme for SMEs. The training covers technical methods, supervision techniques, business and financial management, labour law, HIV awareness for worksites and a presentation by the Development Bank of Namibia on bridge financing available to SME owners who are certified by the programme. The programme also includes a manual and spreadsheets for maintaining cost and payment records and provides the SME with a working sheet for pricing projects and a draft partnership contract between the SME and the main contractor. SMEs are required to hire labourers who live with 5 km on either side of the road section. There have been no defaults on loans made to certified SME contractors.

Main civil engineering contractors who tender for this programme are required to hire 60% newly certified SMEs for the labour-based component of each project. A manual produced by the Roads Authority provides specifications regarding the work methods and end product. Most projects are 40-45 km in length and utilise 3 SMEs for earth works and 1 SME for concrete culvert work. Approximately 50% of the labour based project budgets go to the SME portion of the contract and the balance goes to the main contractor for equipment, quality control, insurance, etc. The Roads Authority advises and supervises certified SMEs on technical and financial operations. To qualify as SMEs, the owner/operators must have at least a 60% share and a turnover of less than US$350,000. SMEs manage up to 150 workers with a supervisor for each 30 workers.

This programme has been successful in building SME capacity, creating additional income for rural households, and increasing the purchase of construction materials and supplies locally. Because of the additional supervision required, projects generally run about 15% higher than mechanised road construction, but a much larger share of the construction budget remains in the local communities to generate economic growth. The Roads Authority is so satisfied with the model that it intends to expand it to road maintenance as well as construction.