BY ABEBE WOLDEGIORGIS
The Ethiopian Construction Industry is categorized as weak sector in which for the last 20 to 25 years its role in the economic growth has been eroded and crippled by multifaceted problems, announced by the government.
Recently, when the meeting organized by the Addis Ababa Trade Sector Association Council took place here, the State Minister of Urbanization and Infrastructure, Engineer Wondimu Seta said that, though the contribution of the construction sector to the Gross Domestic Product (GDP) reached to 19%, the sector suffers from various shortcomings.
As to him, the problems arise from the policy that the sector is governed by. The national construction policy was introduced in 2006. However, after it was implemented improvement based on the changeable situation of the sector and evaluating of its effectiveness was not conducted. “On the one hand, the policy is neglected by many pertinent stakeholders and secondly, it was not evaluated and the necessary attention was not paid on it. As a result, no one can dare to say that the sector has been effective to meet its goals as it was expected” the Deputy Minister said.
Rules helpful for the implementation of the policy have not been introduced. The already existed directives also do not go in line with each other as the result, the sector remains dysfunction. Efforts were exerted to strengthen the sector by allowing foreign companies to come here and work but the venture faced challenges.
He further said that, the government’s intention of inviting foreign contractors was in order to bring helpful knowledge here and experience sharing not just simply to engage in an ordinary infrastructure construction.
With regard to capacity gap between the local and foreign contractors, he said that in the aspect of finance the foreign contractors have more than the local contractors and engaged in many construction activities.
Currently, 79 projects are conducted by local contractors but looking in terms of finance, the local contractors owned only 45% allocated on the sector. Most mega projects are conducted by foreign contractors.
In the earlier times of the past 20 and 25 years, the participation of foreign contractors in the sector was insignificant but in the last 10 years their participation has been increasing. As to the State Minister, even though foreign companies engaged in construction work here, the role of the local contractors was not worth mentioning. They engaged in big projects but mostly on digging grounds and works which need only small level technology which does not upgrade their engineering skills.
Therefore, the aspiration to attain technology and knowledge transfer can be said unsuccessful. Currently, problems are witnessed in relation to the foreign contractors working activities and in this regard some contractors showed reluctance in employing local professionals.
In the beginning, when the road construction project was planned employing local professionals for foreign contractors was an obligatory. Particularly when they win a bid to execute mega projects, they had a duty to employ fresh university graduates. After getting plenty of experiences the employed graduates had left the foreign company and started their own construction projects but now local professionals are giving up the sector because of the above mentioned reasons.
The invitation of foreign contractors to engage in various construction projects had various objectives and among others building the sector capacity, attaining technology transfer, sharing knowledge. However, it was not achieved as it was expected. The other problem the sector faced mentioned by the Deputy Minister is that poor coordination of the sector with the other pertinent institutions, allocating insufficient budget to the projects and the unavailability of plenty of inputs and these and other problems hampered the sector not to play its part in supporting economic growth.
As to the State Minister, the other challenge which should not be denied is that the uneasiness relation among the project owners, contractors and consultants. Had there been good relation, the sector would have achieved beyond what it was expected and problems of the sector would have been resolved.
Though they are the major stakeholders, the three entities instead of cooperate each other, they are going against each other. The inconvenient working environment among the three stakeholders compromises the quality of construction.
He further said that the uncooperative relation witnessed there made construction works bellow the standard and lag behind construction works accomplished centuries ago.
Hence, unless it is redressed, the consequence will be dire. The other factor responsible for the low quality of construction is employing poorly trained contractors and consultants. On the other hand, the poor quality education provided by colleges can be said hampers the sector’s growth directly.
As to him, in Ethiopia, more than 45 thousands professionals graduate annually in engineering and related fields but there is no graduate which properly produce design, inspect quality and manage the project. Leveling professional’s standard only by experience also posed problems and did not add value on the sector. In this regard the level of contractors and consultants can be categorized in similar manner.
Currently, with no sufficient knowledge and experience, anybody can join the profession and if selection is carried out only few of them can transform the sector. As to Engineer Wondimu, currently there are 22 thousand registered contractors and consultants but only 2000 of them are better qualified and deliver as per the sector required.
It is unknown that, whether there is strong construction company with plenty of capacity which can be inherited by the family’s grand children. When working license is provided by the pertinent government institutions to the contractor or consultant the criterion to be fulfilled is only to have machinery and workers and such procedure does not upgrade the sector’s capacity and the quality of the construction works.
There are also contractors who did not engage in the construction work for the last ten years but could renew license in which they use the license for illegal practices. Therefore, to redress the malpractices prevailed in the sector, strong action must be taken and new system also must be introduced. As it is known previously in the system there was no reward for good worker and punishment for guilty.
As to him, unless intergenerational companies are created, cutting age technology is introduced and progress is registered, transforming the sector is unthinkable.
As to the State Minister, his office will strive to take various measures to tackle the problems witnessed currently. As it is known, Ethiopia aspires to reach to the middle income country in the coming 10 years. Hence, unless the sector’s problems are resolved, attaining the goal is unrealistic.
All sectors of development endeavors demand the construction industry involvement that is why priority must put in place for tackling the construction sector challenges.
Currently, the dwindling supply of cement hampered the construction activities and worse to this, even renewing old house is impossible. It is common to see that retailers selling cement by piece of kilo. The price of cement has been more expensive than any other country in the world. Many speculate that the cement product has been expensive due to shortage of products and others said that it was because of artificial shortage; again others suggest that due to weak capacity of cement factories but as to the deputy minister, all are not the true cause of the cement shortage.
As to him, one of the indicators of economic growth measurement is per capita consumption of cement. Currently, based on the nation’s economic development the nation per capita cement consumption is at least 500 kilogram annually. Let say Ethiopia is with 100 million population and based on this number the nation has to produce 50 million tons of cement product annually. Nevertheless, currently the cement factories in Ethiopia have the capacity to produce from 16 to 18 million tons of cement annually. When the product is divided to the whole population, the annual per capita consumption would be 75 kilogram.
Therefore, if it is needed to achieve economic growth, resolving the problems which hamper the construction sector is essential. In addition, substituting the imported cement product is vital.
Due to shortage of construction inputs, the private sector is unable to exert its energy with full capacity and the government projects are also stranded, and individuals are unable to do their own construction. However, it is clear to understand that, Ethiopia has sufficient raw materials which reaches up to 98% for cement production the nation needs which enables not only to meet its local demand but also for export to the neighboring countries and to the Middle East. However, it suffers from shortage of the product.
The State Minister traced back the rootcause of the scarcity of cement products and as to him, the decision taken by the government five years ago can be said the root cause. That time the government inhibited providing license to new investors who showed interest to involve in cement production assuming that the existing cement factories have been producing sufficient products that meet the demand. However, five years later the bag of cement which was sold by 280 birr reached to 2000 birr in which alarmingly sky rocketed.
The decision made by the government that time was only to serve the interest of few individuals rather than the public by blocking other investors no to enter in the cement business.
Consequently, the shortage of cement products has been aggravated and currently the cement factories produce only 1/5th of the nation’s annual demand. Therefore, one should not be surprised by the shortage of supply witnessed today. As to the Deputy Minister, among the various problems witnessed in the sector organizing and disseminating information is one of it. Information with regard to how many construction works have been completed and their outcome is not availed. Therefore, he said that, his ministry is resolute to resolve the mentioned problems
The Ethiopian Herald 25 September 2022
