Construction industry coughing blood
Negative growth due to a bad economy, exacerbated by the exclusion of local contractors and SMEs from huge public contracts, has left the industry on the verge of collapse.
JEMIMA BEUKES
WINDHOEK
After taking massive body blows over the last five years, the construction industry is now profusely bleeding jobs and on the verge of collapse, a report released yesterday indicates.
The report – by the Construction Industries Federation (CIF) – was released yesterday, days after a provisional order for the liquidation of property development company Jimmey Construction, which was originally granted in the Windhoek High Court near the start of October, was made a final order last Friday.
Also, about 100 engineers left the country in search of jobs elsewhere, in 2017, according to Bärbel Kirchner, CIF's general manager.
“The reality is that professionals can leave but not the contractor who has plant equipment and has invested in his business,” she said.
She added that foreign contractors participate in the sector without the required skill, capacity or knowledge of the Namibian industry.
“We do not want a situation where Namibia is entirely dependent on foreign contractors,” she said.
Haemorrhaging
Meanwhile, the industry's contribution to the country's GDP has also sharply dropped from 7.2% in 2015 to 2.9 presently.
This is according to a presentation by CIF vice-president Panashe Daringo during a breakfast meeting with members of parliament yesterday.
The presentation also states that according to a 2017 survey, a total of 8 160 were employed in the sector before September 2016.
A total of 2 377 retrenchments were recorded between May and September 2017 and so only about 5 783 construction workers are currently employed.
By March this year, according to this CIF information, just over half of the businesses in the construction industry said with no income in the near future they would have to cut their operations to a minimum.
Around 11% of businesses in the sector indicated that they would have to keep their businesses dormant or close it altogether.
“Many businesses in the sector have already closed due to the recessionary environment. The majority of employers in the sector have no reserves left to continue operating and any previous profits have already been spent to keep operations going.
In addition, personal finance, loans and overdrafts were used with the hope that demand for construction and building work would pick up,” said Daringo.
Council to regulate
Kirchner further said there is an urgent need for a construction council for which they started lobbying in 2016 already.
“The reason being that we see an exclusion of the local contractors, exclusion of small and medium enterprises (SMEs) that are displaced by the larger contractors. But at the same time the larger contractors are displaced by the foreign contractors,” she said.
She added that many of the local contractors are currently excluded from the construction industry despite being capaciated to take on these projects.
This council is largely aimed at promoting and the development of the construction industry and to protect the Namibian public against unscrupulous contractors.
It also aims to advise the works minister on all matters relating to the construction industry.
It will allow local contractors to work on level playing field when competing with foreign contractors and to allow small contractors to join forces with larger contractors.
According to Daringo, some of the large projects financed through the African Development Bank(AFDB) require bid bonds in excess of N$4 million which Namibian local contractors are unable to meet at present.
He added that the council would seek smaller projects which will include smaller contractors in large-scale projects as well as for bid bond exemptions.
[email protected]
WINDHOEK
After taking massive body blows over the last five years, the construction industry is now profusely bleeding jobs and on the verge of collapse, a report released yesterday indicates.
The report – by the Construction Industries Federation (CIF) – was released yesterday, days after a provisional order for the liquidation of property development company Jimmey Construction, which was originally granted in the Windhoek High Court near the start of October, was made a final order last Friday.
Also, about 100 engineers left the country in search of jobs elsewhere, in 2017, according to Bärbel Kirchner, CIF's general manager.
“The reality is that professionals can leave but not the contractor who has plant equipment and has invested in his business,” she said.
She added that foreign contractors participate in the sector without the required skill, capacity or knowledge of the Namibian industry.
“We do not want a situation where Namibia is entirely dependent on foreign contractors,” she said.
Haemorrhaging
Meanwhile, the industry's contribution to the country's GDP has also sharply dropped from 7.2% in 2015 to 2.9 presently.
This is according to a presentation by CIF vice-president Panashe Daringo during a breakfast meeting with members of parliament yesterday.
The presentation also states that according to a 2017 survey, a total of 8 160 were employed in the sector before September 2016.
A total of 2 377 retrenchments were recorded between May and September 2017 and so only about 5 783 construction workers are currently employed.
By March this year, according to this CIF information, just over half of the businesses in the construction industry said with no income in the near future they would have to cut their operations to a minimum.
Around 11% of businesses in the sector indicated that they would have to keep their businesses dormant or close it altogether.
“Many businesses in the sector have already closed due to the recessionary environment. The majority of employers in the sector have no reserves left to continue operating and any previous profits have already been spent to keep operations going.
In addition, personal finance, loans and overdrafts were used with the hope that demand for construction and building work would pick up,” said Daringo.
Council to regulate
Kirchner further said there is an urgent need for a construction council for which they started lobbying in 2016 already.
“The reason being that we see an exclusion of the local contractors, exclusion of small and medium enterprises (SMEs) that are displaced by the larger contractors. But at the same time the larger contractors are displaced by the foreign contractors,” she said.
She added that many of the local contractors are currently excluded from the construction industry despite being capaciated to take on these projects.
This council is largely aimed at promoting and the development of the construction industry and to protect the Namibian public against unscrupulous contractors.
It also aims to advise the works minister on all matters relating to the construction industry.
It will allow local contractors to work on level playing field when competing with foreign contractors and to allow small contractors to join forces with larger contractors.
According to Daringo, some of the large projects financed through the African Development Bank(AFDB) require bid bonds in excess of N$4 million which Namibian local contractors are unable to meet at present.
He added that the council would seek smaller projects which will include smaller contractors in large-scale projects as well as for bid bond exemptions.
[email protected]
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