Construction still bleeding

The building sector was severely affected by a reduction in government spending and has seen a huge exodus of skills.

17 April 2019 | Business

Construction Industry Federation (CIF) vice-president Panashe Daringo has called on the government to assist the industry, which has been hit particularly hard by the country's ongoing economic woes.

Daringo, who is the managing director of MPP Civils, says he has had to lay off many of his employees, while repeatedly making attempts to engage the government on the state of the construction sector.

“Things are bad, we are praying for some kind of intervention. It feels like we are speaking to deaf ears,” Daringo said, following attempts to engage the government.

According to him, the construction industry has seen a huge exodus of skills.

“The reality on the ground is a lot scarier. It has caused a lot of skill losses,” he said. “It's a domino effect and construction was the hardest hit.”

His sentiments were echoed by CIF general manager Bärbel Kirchner, who had earlier said the sector was severely affected by a reduction in government spending.

“The construction sector is hugely affected by government budgets and allocations to capital and infrastructure projects. Naturally, from the construction industry's perspective, we would like to see much greater budget allocations for development projects,” she said. According to Kirchner discussions were being held to create a favourable working environment for local contractors. “Discussions are ongoing as to how qualification requirements should be adapted to Namibian economic conditions. Essentially, we need to lower the financial requirements for pre-qualification.

If that is not possible, we need to reduce the size of the projects, so that more local contractors can participate,” Kirchner said.

“Whatever decision our authorities take, we need to make sure the local industry is also engaged.

“This will maintain our capacity, keep businesses running and people employed, and ultimately ensure that our money stays in circulation in Namibia.”

According to the Bank of Namibia (BoN), during 2018 real value added in the construction sector was estimated to have contracted by 18.3% in 2018, compared to a deeper contraction of 25.6% registered in 2017.

The smaller contraction was partly attributed to the increase in the real value for both buildings completed and government expenses earmarked for construction activities. It was reported early last year that about 60 000 jobs were lost across the economy during the 2016/17 financial year.

This was according to an Employment Equity Commission report that was submitted to parliament.

The job losses were attributed to the depressed economic conditions experienced in the country since 2016. Most government construction projects were put on hold due to a lack of funds and the settling of outstanding contractor invoices amounting to N$2.2 billion at the time. This contributed to a severe decline in construction activities, with the sector heavily reliant on government contracts.

About 6 510 jobs were lost in the construction industry during 2016/17.


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