Regional transport development II, Zambia component (690-0254) : Kafue-Lusaka road rehabilitation project -- project assistance completion report

The project rehabilitated 53.4 km of the Kafue-Lusaka road, 3.9 km more than had been anticipated in the original project design. The work involved the training of 108 technicians and mechanics in-country, and 4 engineers through a one-month course in Tanzania. The newly rehabilitated road has relieved capacity constraints on the region's trunk road system; removed bottlenecks between Lusaka and Kafue; and accommodated projected annual increases in traffic. The life of the Kafue-Lusaka road has been extended by 20 years. Under this contract, a devaluation of the Kwacha caused a major dispute (which was resolved) between the original contractor, Kajima, and the Government of Zambia regarding payments. The lesson learned is that in countries like Zambia, where exchange rate fluctuations are the norm rather than the exception, future contracts should be denominated in U.S. dollars in order to avoid such problems.