HomeBusiness DigestContracts eluding construction industry –– Chiyangwa

Contracts eluding construction industry –– Chiyangwa

CAPACITY utilisation in the construction industry is low owing to lack of government and the private sector contracts, Construction Industry Federation of Zimbabwe (Cifoz) president Philip Chiyangwa says.

Chiyangwa says capacity has been affected by economic challenges the nation faced until the adoption of multi-currencies last year.
According to Chiyangwa, government projects used to account for 60% of construction contracts while the private sector contributed 40% before the hyperinflation era.

“The construction industry is operating at about 20 to 30% capacity. Government is facing economic challenges and channeling most of its financial resources to procure essential commodities and utilities,” he said.  “During the past 10 years Zimbabwe experienced a slump in the construction sector mainly as a result of the shortage of foreign currency. The development has put the construction Industry into dormancy.”

He added that government has diverted funds to other priority areas such as food aid, repairs and maintenance in order to save the existing properties.
Chiyangwa said: “There is shortage of foreign currency to replace plant and equipment and the industry has not been able to access cheap funds from banks due to the repayment periods since the industry works on projects which are paid in stages”

He also said the industry has lost a lot of skilled labour to other countries and is also facing difficulties in exporting services.
“The industry is facing difficulties when exporting services to earn hard currency because there is no clear guidance from the Ministry of Industry and Commerce on how the process is implemented,” said Chiyangwa.

He, suggested measures to address the challenges the industry is facing.
“There is need for value added products and risk management to address the challenges faced by the industry, meaning that government is to encourage locally manufactured products to be used on projects. Clients should understand the contract obligations and avail establishment funds and upfront procurement of materials before the start of a project,” he said “The consultants should be convinced that the funds are available for the job before commencement and contract document should be in line with the multi currency system used in Zimbabwe.”

He added: “There is need for resource utilisation and productivity, meaning that government should make sure that they have enough funds to start and complete a project and add value to the national assets. Plant and equipment need to be capitalised and there is need for a regulatory framework which will enable contractors to competitively remunerate employees e.g. (tax incentives etc).”

He encouraged shareholder teamwork to revive the construction industry through a merger between Cifoz and Zimbabwe Building Contractors Association.

 

Winfilda Shana

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