18 June 2019

Namibia: Construction Industry Slump 'Self-Inflicted'

The construction industry, which has been on a decline for the past few years, is partly crippled by local companies selling tender work to foreign firms, a report has revealed.

This is part of preliminary findings of an ongoing audit into the demise of the construction industry, as reflected by deputy transport minister Sankwasa James Sankwasa.

The construction sector, according to the 2018 preliminary national account, recorded the highest decline in 2016 of 26%, followed by 25% in 2017 and an 18% decline last year.

According to the 2018 Labour Force Survey, the construction sector was one the biggest retrenchers, when more than 17 000 workers were let go between 2016 and 2018.

The retrenchment continues this year, as 172 employees have already been retrenched in the first three months, according to the ministry of labour quarterly report of 2019.

In an interview with The Namibian on Friday, Sankwasa said the role-players in the industry have themselves to blame for the state of the sector.

"I am sitting with proof that says 99% of road construction work that was done in this country was by joint ventures. But are we saying our companies don't have skills after almost 30 years of independence?" he asked rhetorically.

Sankwasa said this when he confirmed that his ministry is busy with an audit on the construction industry, adding that the audit report is a response to the public's concerns about the ailing state of the industry.

The Construction Industry Federation (CIF) has been calling on the government to protect local construction companies from the stiff competition coming from foreign companies.

"The challenge we have is that these joint ventures appear to exist only in paper. From the government, we think we have given our Namibian companies a contract, but they do not even report on site. They are happy to be bought out by these foreign companies," Sankwasa stated.

He said when a tender is allocated, it indicates a joint venture, but the real construction is done by the foreign company, with no direct or indirect participation of a local company.

Sankwasa said as a result, Namibian companies are not growing and skills transfer is non-exsistent.

"After this audit, I am going to interrogate all these joint ventures, and find out what skills they have acquired, and if they did not, why? For almost 30 years, they still have no skills. Why are the construction companies taking 30 years to graduate if the government has been rolling out joint ventures for local companies to learn?," he asked incredulously.

The deputy minister said the absence of a construction industry law to regulate it has made it impossible to ensure that companies winning tenders do not sell such tenders to foreigners.

"We have not legislated the construction industry, but we have a bill that is going to be tabled in parliament at the end of the year," he added.

In February, the CIF asked in a press release that parliament should examine the plight of companies in the construction industry which is being dominated by foreigners, and to consider having a national construction council.

The CIF further said "a less regulated environment would provide the scope for many players to operate - including tenderpreneurs; foreign companies without being registered in Namibia, some of which operate without due consideration of local interests; as well as contractors taking on projects without sufficient experience, qualification or financial capacity.

"The effect of such an unregulated environment is that legitimate local contractors with adequate capacity are increasingly being pushed aside, and that ongoing local capacity-building, continued employment and the provision of decent work are increasingly being undermined," the CIF stated.

The general manager of CIF, Bärbel Kirchner, told The Namibian last week that the federation has been engaging the Ministry of Works and Transport for years to ensure that effective legislation is in place to ensure that the industry is regulated.

"That would prevent tenderpreneurism, the selling of contracts by middlemen. It would also address the question of the quality of work, and the completion of projects," she said.

"At times like this, when the livelihoods of many people are being affected, it is important that Namibian companies are given explicit support by our government. It would also be of undisputed benefit to the Namibian economy due to their contribution to government revenue - so we are thankful for this commitment".

The CIF is furthermore of the opinion that public procurement policies need to be scrutinised to avoid the disqualification of local contractors, based on financial requirements such as turnover or cash flow.

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