Construction bleeding

The construction industry has pleaded with the government to come to its rescue by issuing new building tenders.

19 May 2017 | Business

As the difficult times continue, the year 2017 is shaping up as another down year for the construction industry.

The Construction Industries Federation (CIF) says unless new tenders are issued by June, up to 63% of its members face closure.

The CIF has also indicated that between 1 September 2016 and 31 March 2017, 30% of the workforce in the construction sector was retrenched.

The situation has become so critical that the CIF has implored the government to intervene by issuing new tenders.

According to CIF general manager Bärbel Kirchner, the repercussions have been so severe that even well-established construction firms face closure.

This sentiment is echoed by Namibia Construction director Karl Hans Junior, who says his firm witnessed a sharp decline in its workload, with an observable 20% reduction in the 2015/16 financial year and a sharp reduction of 40% anticipated for the 2016/17 financial year.

“It is generally understood that a consolidation of the national budget and prioritisation of public expenditure was necessary for the long-term gains of our economy, however, our appeal is that the budget considered for capital projects would be revisited and that related reductions will be minimised.

“We know that our government needed to take measures in the long-term interest of our country,” Kirchner said following an announcement in September 2016 that the ministry of finance would freeze all new tenders.

Asking for more, she said: “Our industry, which we believe can trigger a multiplier effect and stimulate also other sectors of our economy, ideally should receive a slice big enough to make a meaningful contribution to Namibia's economy and to secure employment.”

She said that contractors were owed approximately N$1.8 billion and sought clarity on government projects that were approved in the construction sector for the current financial year.





“Businesses operating in the construction sector need to know when the additional funds of N$1.8 billion for services delivered to the public sector will become available and what the proposed share will be for the construction sector.”

“There is also great uncertainty about which projects, that already had been awarded, will proceed and which projects will be cancelled. The sector needs to be provided with a list of all projects that will be advertised and for which tenders will be requested in 2017/18.”



Calle to the rescue

Finance minister Calle Schlettwein has moved to allay fears, saying that the government will be using a loan facility secured from the African Development Bank to spur infrastructure projects. He also indicated that public-private-partnership arrangements would be sought.

Speaking to Namibian Sun briefly, he said: “We shall implement the budget and that includes the development provisions. Secondly, we are intending to get public-private partnerships going and thirdly, with the financing facility from the African Development Bank (AfDB), some infrastructure projects could be started.”

The ministry of finance recently secured a loan facility with the AfDB and will receive N$3 billion for the 2017/18 financial year. The AfDB, in consultation with ministries, government offices and agencies, will study projects that would require financing, Schlettwein said in a recent statement.



Lacklustre growth

The latest research by stockbroking firm IJG Securities has shown that construction activities have slowed down considerably.

“A total of 143 building plans were approved in April with a value of N$112.9 million, while nine buildings with a value of N$26.7 million were completed.

“Thus far, 2017 is off to a poor start; year-to-date 566 plans were approved while 76 were completed, the lowest number of plans approved and completed in the last 20 years.”

On the commercial property front, its report points to equally lacklustre growth in the construction sector.

The number of commercial units approved in 2017 amounted to 13, valued at N$50.1 million, according to IJG.

“This compares to 31 units valued at N$263.4 million approved over the same period in 2016.

“On average, over the last 20 years, 19.2 commercial units valued at N$157.6 million were approved in the first four months of the year, which would indicate that this is an especially slow year thus far.”

Namibia Construction's Hans is also not too bullish.

“Our turnover has gone down but we are still busy. It is problematic but we do not have to close our doors. The whole industry is taking a knock.”



Blue-collar workers affected

Blue-collar workers have felt the pinch of government's decision to freeze all tenders while non-payment by the ministry of finance has not helped matters much. This is according to Metal and Allied Workers Union (MANWU) secretary-general Justina Jonas, who spoke to Namibian Sun on industry matters yesterday. “We all know that this is a serious problem for the construction sector. We have been engaging government to ensure to ensure that the retrenchments are not as severe,” said Jonas of her union's efforts at finding a harmonious solution.

“Many subcontractors are not working because government has not paid. It is a bit difficult for them to hold on. We have embarked on consultations with the Roads Authority and will through our mother body, the National Union of Namibian Workers, seek consultations with the Ministry of Finance.

“The RA has been positive and has helped us on certain issues that I cannot reveal. The NUNW is arranging that consultation and we are just waiting for that arrangement.”

Jonas also said that blue-collar workers were hit hard by the decision to freeze government tenders. “Unfortunately this has happened,” said Jonas. “Our national leaders must consult the people affected. The working class has been betrayed and what has happened is not something that that must be repeated. These are people that are exposed to so much.”

OGONE TLHAGE

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