Windhoek — During the past 18 months the construction industry experienced the most severe economic circumstances since 2009, with the activity rate in the sector contracting by 26 percent last year relative to 2015.
And while the sector is expected to improve this year, finance minister, Calle Schlettwein feels that the outcome for the first two quarters of 2017 indicates deep-seated contractionary pressures.
"This is reflective of the difficulties of adjusting to boom-bust cycles and calls for measures to align business strategy at the micro level, and timely implementation of alternative supportive measures at the macro level," said Schlettwein at the recent annual general meeting (AGM) of the Construction Industries Federation (CIF).
The AGM is a platform for the CIF to take stock of the challenges the industry encountered over the past year and a half, but perhaps more importantly, it is also a platform to look forward to the future and the opportunities it holds for the industry and the economy in general.
"On its part, the government wishes to proceed with putting into action the interventions to support activity in the construction sector within the framework of medium-term budgetary spending restraint and structural policy reforms to complement the national budget and further unlock investment opportunities in the economy," said Schlettwein.
He further noted that for the remainder of the year and for 2018 in particular, he sees "scattered green shoots" budding on the economic landscape.
"On the public sector front, we will roll out interventions to revive the pace of activity on some of the ongoing major capital projects, while opening up opportunities for new ones. This will be done through harnessing alternative means of financing."
"I have already announced the planned establishment of an infrastructure fund at DBN that will be ring-fenced to finance the completion of ongoing capital projects and as a conduit for financing long-term infrastructure projects. This fund will run in parallel with the AfDB infrastructure loan facility," Schlettwein added.
He pointed out that progress has been made on assessing public-private partnership (PPP) options for some potential infrastructure projects, adding that he will aggressively seek to harness PPP opportunities where the potential exists, while keeping fiscal risks in check.
"Amendments to domestic asset requirements from the current minimum threshold of 35 percent to 45 percent by October 2018 will release a substantial amount of money into the economy. The private sector should work together with the government to identify listed and unlisted investment opportunities and the Ministry of Finance avails itself of such result-oriented engagements.
We should make concerted efforts to bring about effective SOE reforms and better utilization of state assets as a means of enhancing investment in infrastructure development, and more importantly, the Public Procurement Act offers opportunities for local procurement and tendering. This policy space should be utilized optimally to the benefit of the local economy," said Schlettwein.