Materials shortage slows down Zimbabwe's construction industry
Harare, Zimbabwe (PANA) - Acute cement shortages and unsustainable prices of construction materials, drove down Zimbabwe's construction industry by 6.3% percentage points to 7.7% last year, said the 2018 4th Quarter Treasury report.
The downward revision was from an initial projection of a 14% growth for the construction sector last year as stated in the 2018 National Budget.
“The construction industry boom that was being experienced in the economy during the first half of 2018 suffered a huge setback following acute cement shortages and unsustainable prices of construction material during the remainder of the year. Consequently, prices of major components such as cement increased sharply from between US$7-US$14 in August 2018 to a range of US$35-US$45 per 50kg bag,” the according to the report released on Thursday.
“This has adversely affected progress in many construction activities, especially by individuals whose purchasing power was dampened by these price hikes. The situation was also worsened by cement dealers who demanded payment in US dollar hard currency instead of the Bond Notes or RTGs, following rising and unsustainable parallel market exchange rates.
“In light of these developments, the 2018 growth of the construction industry is estimated at 7.7%, a downward revision from the initial growth projection of 14%.”
The report went on to state that the shortage of cement, in particular, dampened last year’s envisioned growth of the industry.
“These shortages started in earnest beginning of August, as shortage of foreign currency to procure spare parts, raw materials, packaging materials and equipment also negatively impacted on the growth of the construction industry,” the Treasury report read.
The performance of the construction industry was mainly attributed to funding towards road rehabilitation and construction by government as well as housing projects implemented by individuals, building societies and commercial banks throughout the country.
Commercial banks and building societies, particularly, have in the last three years geared a huge portion of their loan books towards housing by offering more mortgages to the market.
However, a September 2018 statement from the Cement and Concrete Institute of Zimbabwe (CCIZ) indicated that the industry would not be able to cope with the rising demand, estimated at 30% year-to-date at the time.
The CCIZ made the statement in response to the continued absence of foreign currency shortages to import spare parts to deal with incessant plant breakdowns caused by the huge demand for cement.
CCIZ consists of Zimbabwe’s largest cement manufacturers, namely Lafarge Cement Zimbabwe, PPC Zimbabwe and Sino-Zimbabwe.
Treasury reported that for 2019, growth of the construction industry would continue to be bolstered by activities of “road rehabilitation and construction, power generation expansion projects, dam construction, border posts redevelopment, expansion and rehabilitation of various water and sanitation projects and expansion, as well as modernisation of state universities”.
“Investments in development of low cost housing by Government, in collaboration with public sector entities, commercial and merchant banks, as well as self-financing schemes by individuals, are also expected to sustain growth of the construction industry,” the report said.
-0- PANA TZ/AR 11Apr2019
