Zambia’s Parking Space Leasing Contract Collapses
Lusaka is the capital city of the Southern African country of Zambia, with a population of 1.7 million, nearly matching that of Phoenix city in Arizona, where attempts to lease parking management to private sector have recently run into problems.
The contract was to run for three months on trial, at which point it was to be reviewed and possibly extended for 10 years.
The Lusaka City Council (LCC), which governs the city under the Ministry of Local Government, had voted in late 2016 to sign a Memorandum of Agreement (MoA) for the lease of all on-street and off-street parking spaces to the management of a private firm, Parkrite Zambia. Parkrite Zambia is part of the PARX Smart Parking Solutions Ltd (PARX SPS) that provides parking fee payments, enforcement systems and parking management solutions and systems to municipalities and parking operators.
Parkrite was brought on board ostensibly to improve traffic flow in the city, enhance parking security, and increase revenue for the local authority. It was one of the 13 firms that responded to a tender call for the installation and operation of the car parking meter system within Lusaka City, which is the equivalent of Corpus Christi in size.
The MOA was valid for 90 days, after which LCC was to sign a working contract with Parkrite. The company also had the right to give notice to Council of intention to terminate the contract if after three months it came to a conclusion “the efficacy of the project would not be achieved due to social-political factors.”
According to LCC Parkrite was “to manage the parking in the Central Business District with effect from 10th October, 2016.”
“In light of its mandate to manage the traffic flow into and out of the Central Business District, Lusaka City Council has embraced the Smart Park Africa initiative and the contract for parking will be managed by Parkrite Zambia limited on behalf of Lusaka City Council,” said Alex Mwansa, former LCC Town Clerk.
He said Parkrite was to “manage, collect and enforce parking fees payment” and remit 40 percent of the proceeds to LCC after submitting financial statements on a monthly basis.
The contract was to run for three months on trial, at which point it was to be reviewed and possibly extended for 10 years (up to 2026) before the parking management system and parking infrastructure reverted to LCC.
However, it took nearly 12 months after the MoA was signed for LCC to ink the working contract with Parkrite.
A team from Zambia’s Ministry of Local Government said the delay in signing the contract was “highly irresponsible on the Council and they may have led to loss of revenues, considering that the company did not terminate the MoA within three months.”
Inadvertently or otherwise, both parties did not specify in the agreement what happens to motorists and businesses, people who had paid their parking fees in advance, some covering the three months the MoA was in force.
This meant Parkrite was supposed to remit 40 percent from the three month’s parking revenue proceeds that had already been paid to LCC.
Probably to atone for the omission, LCC did allow Parkrite to manage and collect parking revenue for three months after the contract was terminated in the first quarter of 2019, “within which they are expected to wind up their activities and hand over the parking sites back to the Council.”
Understandably, Parkrite did not remit any funds to LCC because the company is said to have posted losses in the first 90 days after the signing of the MoA “as it was expected to meet in full the capital expenditure required in the implementation of the parking system (Smart Park System)”, according to LCC.
Parkrite collected an average of U.S.$20,000 for the first three months, far below the U.S.$28,000 it listed as expenditure within the period.
At the time of signing the MoA, LCC had, for the ease of parking management in Lusaka city, divided the on-street and off-street parking spaces in the city’s Central Business District into Zones A, B and C.
Zone “A” covered Cairo road and was limited to a maximum parking period of one hour per session, while Zone “B” encompassed all of Cha Cha Cha road and Freedom way. The rest were classified under Zone “C,” including Kamwala.
However, it soon emerged the agreement between LCC and Parkrite Zambia could not last more than three years as the Council, symptomatic of many African cities, announced the termination of the parking management contract as differences on the amount and sharing of the collected parking revenues deepened.
LCC, in terminating the Parkrite contract, claimed the company had, in 2017, a whole two years before ending the agreement, failed to pay to the local authority the contractual share from the U.S.$67,159, an equivalent of 0.08 percent of San Diego city’s parking revenues of U.S.$81.5 million for 2013.
“Despite the private company raising K970,000 (US$67,150) from motor vehicle parking spaces in Lusaka, no payments were made to the local authority,” said LCC Spokesperson George Sichimba.
LCC also said termination of the parking management contract was related to the decision by a Zimbabwean shareholder in the company to part ways “with the European shareholders who have pulled out of Parkrite (leaving it with) no financial capacity to run the contract.”
“The local authority is also aware that Parkrite has engaged council employees in the legal department in an attempt to garner support on technicalities in order for the council to compensate the parking company,” said Sichimba.
However, Parkrite has insisted the contract is still in force until a suit filed in court challenging the termination, is determined.
Parkrite has refrained from responding to the confirmation of the parking management contract and instead called for patience until the “Judicial process currently under way is concluded.”
However, the company insisted “we continue with our work in Lusaka and time will tell as to what direction this whole matter will take.”
Meanwhile LCC has deployed parking attendants at all parking sites in Lusaka and equipped them with Point of Sell (PoS) machines to enhance accountability, according to Sichimba.
Motorists are required to pay cash to parking attendants, but they should only accept PoS generated receipts as manual ones are no longer recognized by LCC.
“Parking attendants along Cairo Road and Shoprite Car park have been targeted first because of high turnover of parking, but the project will be rolled out to the entire central business district-CBD,” Sichimba said.
Shem Oirere is Parking Today’s on the ground reporter in Africa. He can be reached at email@example.com.