Construction pins hope on national council
21 August 2019 | Business
In a statement issued by the CIF yesterday, its consulting general manager, Bärbel Kirchner, said the body is “very hopeful” about the outcome of the recent Namibia Economic Growth Summit.
One of government’s commitments flowing from the summit was that the ministry of works and transport introduce the National Construction Council (NCC) before the end of the financial year. Such a council will ensure that the industry is better regulated and it will address the unequal playing field that currently exists in the sector, Kirchner said yesterday.
“We have been pleading for the establishment of a council for years and are really looking forward to when we finally have a more regulated environment in our industry. It would be in the interest of everyone – obviously our contractors, but without any doubt, also financiers as well as clients, especially our government,” she said.
A report released by ministry of labour, industrial relations and employment creation last week shows 13 construction companies had to retrench 114 workers in the second quarter of this year.
Construction has been in recession for more than three years. Its contraction in the first three months of 2019 marked 13 consecutive quarters of negative growth.
A drastic cut in government spending which started in 2016 had a major impact on the construction sector. The latest data released by the Namibia Statistics Agency (NSA) shows employees in the construction sector plummeted about 18 900 or nearly 36% from 2016 to 2018. Last year, the sector had 33 707 employees.
Youth employment in construction fell by around 13 800 or nearly 37%. Own account workers, or people who are self-employed, jumped by nearly 20% to 6 482 last year, while employers rose by about 6% to just above 4 000.
The Bank of Namibia (BoN), in its economic outlook released in April 2019, expects construction to grow by 1.3% this year and 1.5% in 2020.
More than decade
According to Kirchner, a draft bill for the establishment of a NCC was reviewed at a stakeholder workshop in2018. The CIF has been calling for the establishment of a NCC since 2006.
“The effect of such an unregulated environment is that legitimate local contractors with adequate capacity are increasingly pushed aside; and that ongoing local capacity building, continued employment and the provision of decent work is undermined,” she says.
A NCC would require that any contractor operating in Namibia be registered with the council. Depending on the criteria determined by the NCC, contractors would then be categorised. This would ensure that only those that indeed are actively operating in the industry would be registered, Kirchner said.
“In addition, it would ensure that capacity would be aligned with size of projects. The training and development of contractors will also ensure that capacity of respective contractors will increase over time,” she added.
The investment pledges made by the private sector at summit are also of great interest to the construction sector. “With validated commitments of N$20 billion and possibly reaching N$50 billion, pending verification, the CIF believes that there is large scale opportunity for the construction sector,” Kirchner said.
She added: “We are excited about the potential opportunities for our sector and will engage with the respective investors to ensure that everyone is aware of the Namibian capacity in the construction and building sector.
“Once our sector gets actively busy again, we, without any doubt, will see the spillover effect to other sectors. This is provided that we engage our local contractors and buy our material locally, so that we keep the money circulated in our economy,” Kirchner concluded.