Ethiopia devotes to boost its construction industry
By Gemech Tussa
Tigrai Online, April 10, 2017
Ethiopia, in its political and economic history, has managed to become one of the countries in Africa that considered as an emerging economy and progressing democratically. Economic analysts and international organizations working in the field confirmed that, the country has been scoring a double digit economic growth for the past decade. The country is endowed with a lot of natural resources that could be harnessed for its development, although many of them are yet untapped. In this regard, the country has been working industriously in order to alleviate poverty and ensure sustainable economic growth.
It is of paramount importance to invest in the construction sector along with other development sectors in the country, because, it is crucial to propel the nation to higher levels of development. In fact, it is obvious that without developing the construction sector properly, the development of all other sectors including the agriculture and the manufacturing could be challenging.
Infrastructure facilities, such as roads, schools, health centers and residential houses are part of growth. At the same time, they enable the tapping on the nation's human and material resources. The second Growth and Transformation Plan also emphasizes achieving economic growth bringing structural change as its main objectives. In this regard, transforming the agricultural-led economy to the industry led economy requires the shifting of agricultural labor to that of manufacturing and service.
In this case, it is possible to realize that, the expansion of urbanization needs more investment in the construction sector. That is why the government has been devoted to the sector and as a result the construction industry has contributed a significant share in the Growth of Domestic Production.
The important task which is undertaken in connection with this is creating value chains with other sub sectors, like cement industries and other small scale enterprises, which are engaged in metal and wood work production utilized as an input for the building construction and stone crushing companies.
As a result, metal, paint, aluminum and electrical cable industries have been established by local and foreign investors. And, so far, they could substitute the imported ones and save the nation's hard currency earning that would be spent for importation. In order to utilize the bamboo tree for construction, vast areas of land are cultivated by the private sector in different parts of the country.
The sector is now demanding a skilled manpower. That is why the government opened an opportunity for the expansion of both public and private higher educational institutions. Annually, thousands of Engineers and Architectures graduate and join the industry and strengthen the professional ground of the construction industry. Currently, part of the civil and the electro-mechanical work of the Hiddassie hydro-power dam is subcontracted by local companies that really indicates how the industry has a potential to penetrate not only the huge projects at local markets but also at global level.
For the past ten years, the country has launched a number mega projects that changed the country’s entire situation. Although there were only foreign construction companies at the beginning, later the country managed to ensure the involvement of local construction companies through training and technology transfer.
The involvement of local companies in the construction of sugar and agribusiness projects contributed to enhance the capacity of local companies. As a result, the sector is growing fast. A number of huge projects like road, dams, industries and other infrastructural construction projects are given to local companies.
Of course, local companies compared to the international ones are less competent particularly, in terms of capital, technology, skills and experience. However, local contractors have taken over their role in the long run, initially through carrying out the construction work in a joint venture with foreign companies.
When the country introduced some development projects, efforts were made to bring both local and foreign contractor together in a bid to give an opportunity for the local contractors gain knowledge from foreign contractors and then, develop a capacity so as to handle huge projects by themselves.
In fact, the coming of foreign contractors contributed a lot for the development of local contractors in many ways. One is there happened a technology transfer from. And the other is there would be a possibility to run projects that demand a huge capital in cooperation. However, these local contractors have still some limitations. One of the crucial challenges is lack of efficient capacity on execution of projects.
Nowadays, the construction industry has become one of the single largest sectors, which could accommodate thousands of private companies both local and foreign. Despite efforts exerted by the government to support these companies, the contractors have their own inherent weaknesses. Among others, they organize themselves with a few corrupt individuals in attempting to misuse the system instead of working properly.
The number of contractors who have the vision to grow while the country grows is not considerable. Rather the number of those who target at their immediate benefits rather than their ultimate goal which uplift them to a higher level is so large. Some of the problems such kinds of contractors have been committing includes tax evasion, working without license, using forged documents and misleading public officials.
In fact, there are also some problems created by some public officials. Lack of transparent system, the tardiness of payments for the contractors and taking to much time in settling dispute with regard to the clearing away of the residential houses are the major stumbling blocks, which hamper the growth of the sector.
Therefore, it is so fundamental for the government and the contractors to come together and identify the problems from both sides and put a solution to them. In fact, contractors in Ethiopia are classified as general, building, road and specialized contractors. According to recent documents, the number of contractors has been growing from time to time as the country’s construction sector is booming. However, there is need to watch the sector and the contractors out for efficient and quality performances.
The government has given a special attention to the construction sector, because there will not be any kind of development if the construction sector has paralyzed. The point of contention in this case is the fact that contractors themselves should be strong participator of exposing those who have been cheating the government and the people using forged documents and failing to pay their tax.
These are the challenges in the growing sector which need to be curbed soon. The expansion and development of the construction sector has emanated from the overall economic development of the country. The government has been exerting unreserved efforts to realize the development of the sector. However, only the government cannot do that. It is so crucial to consolidated efforts construction to further boost the sector.