Namibia: Construction Council to Play Match-Making

21 November 2019

NAMIBIA'S construction industry federation will be matching contractors with projects according to their sizes to ensure that tenderpreneurs or agents who do not add any value are cut out.

This was revealed by Barbel Kirchner, the consulting general manager of the Construction Industries Federation (CIF), when she explained the outcome of a construction conference which was held in Windhoek last week.

She said their overall aim is to align the current economic and fiscal environment and its impact on the construction sector.

"We zoomed in on the necessity of immediately establishing a construction council in the interest of better regulation in our industry," Kirchner stated.

The construction industry has been declining by 12% annually on average since 2015, shedding its workforce from 65 000 to 47 000 by 2018, with the informal sector affected the most.

The delegates were thus adamant that Namibian-owned businesses should be deliberately involved in projects financed by the government's development budget.

"Opportunities for infrastructural development in the energy, agricultural and water sectors, as well as housing, health and education, were discussed. Our intention is to secure more work for local contractors, and raise awareness among the respective authorities on how important that is," Kirchner stressed.

PUBLIC TENDERS' RELIANCE

According to a presentation by Nico Badenhorst, the president of the CIF, the government's expenditure accounted for an average of 81,6% of the construction sector over the past 10 years, and therefore was the main driver of the sector.

As such, the contraction in the construction sector in 2016 was propelled as the government embarked on fiscal consolidation, and the austerity measures reduced the overall contribution of the sector to GDP to 2,9% in 2019, compared to three years back when it contributed 7,2%.

In December 2017, the CIF interviewed 60 players in the industry. Of those 3,3% are bankrupt, 8,3% of companies have closed down, while 41,7% are scaling down activities.

The CIF members also declined from 481 in 2015 to 292, with 50% being contractors and 24% SMEs.

The CIF indicated that the current development is very destabilising for the construction industry.

Badenhorst stated that the capacity that has been carefully and tenaciously built by various companies over the years is now lost, professionals are lost, and no investments have been made, which leads to huge opportunity costs.

He added that the loss has not only engulfed the construction companies, but it also had disastrous consequences for the country's future.

WAY FORWARD

The stakeholders in the sector proposed a Namibia Construction Industry Council, which would promote and spearhead the development of the construction industry.

This council would be responsible for the registration of persons engaged in the construction industry, the protection of the public from unscrupulous contractors, the coordination of technical training of contractors, and capacity-building for contractors engaged in the industry.

The council would also advise the minister of works on all matters relating to the construction industry, and generally for incidental matters.

The CIF believes that the council would level the playing field, realign the economic benefits of local procurement versus regional and foreign procurement, while considering contract size, location, material sourcing, ownership, youth, women, previously disadvantaged persons, experience, and access to finance.

Such interventions would furthermore allow contractors to grow gradually, sieving out the ones that do not perform.

The federation pointed out the injustice in some of the large projects financed through the African Development Bank that require bid bonds in excess of N$4 million.

"This is a major restriction for local companies, as it only appeals to foreign firms that often employ their own citizens," the CIF presentation showed.

The federation welcomed the introduction of the public-private partnership policy, saying that large financing infrastructure gaps can now be sufficiently filled by using this financing model.

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