Dar es Salaam: Despite economic hardships experienced in the yearlong, construction industry has continued to be one of the most exciting sectors contributing immensely in the economic growth. The industry is currently experiencing a period of growth primarily driven by the recent developments in the road works, housing and mining industries. The effectiveness of these sectors directly contributes to the creation of economic opportunities such as the ease of market access, increased competition, encouragement to trade, tourism and foreign investment, increased revenues and employment opportunities.
The Contractors Registration Board (CRB) registrar, Mr Boniface Muhegi, said in an interview that construction sector has made outstanding performance in 2011 managing to grow at about 12 per cent of the Gross Domestic Product (GDP).
The construction sector, one of the fastest growing in the economy has an annual turnover of between 1.8 billion and 1.9 billion US dollars (about 2.7tr/-).
"Although the economy has been passing through tough times, we are all witnessing the continued mushrooming multistoried buildings every other day, being just a single sign demonstrating positively how the sector is fairing," he said.
For example, statistics show that construction projects with a total value of 2.8tr/- were registered in 2010, with building works accounting for half of the total value of the projects. The value of registered building works totalled 1.4trl/-, while civil works 884 bn/-, specialist electrical 231bn/-and electrical works 187bn/-. More than 60 per cent of the government budget is spent in the construction sector.
This makes government the biggest employer in the sector. In the meantime, he said domestic contractors participation in various tenders has been increasing basically due to government support and favour in providing them most of the works particularly those of the local government authorities.
The average market share possessed by local contractors has jumped to 42 per cent in 2011 from only 38 per cent of the previous period. According to CRB boss, the number of contractors has jumped to 7, 000 this year from almost 2,000 a decade ago.
Foreign contractors, who make three per cent in the sector, take the lion share of over 58 per cent while local companies though constituting 97 per cent undertake hardly 40 per cent of the entire market value of construction works.
The construction regulatory body has been striving to reinforce local contractors in the business from 10 per cent in 1998 when foreign firms were executing over 90 per cent of the total value of projects in the country.
Apart from being proportionately small compared to the public, the private financed construction projects continued to make impressive performances apart from the increased costs of the necessary materials.
However, the soaring fuel prices and other petroleum products, rising inflation rate, local currency instabilities have continued to push up costs for other factors like the skilled labour. For example, the monthly headline inflation rate bounced to 19.2 per cent in November from 17.9 of the preceding period.
These, according to stakeholders in the construction sector contribute greatly to a burden of rising unpredicted costs which are to be borne by consumers, implying also that some private developers could cut down some projects due to increased costs.
They said the government as major employer in the construction sector has to respond to the actual situation on the ground to facilitate timely completion of the projects and rescue contractors from incurring huge losses.
Chinese construction companies are largely preferred and having been posing excessive competition over local companies due to their comparatively low bidding price, observed an expert in the construction industry.
Major contracts are awarded to these companies that make the construction business highly competitive. Since the ability of local contractors to tender internationally remain minimal due to limited capital and skills, the government empowerment tool should be introduced to enhance the capacity of local firms to win internal tenders.
Also the long term public and private investments in the construction sector especially in roads and bridges construction, residential and non residential constructions could lead to outstanding performances of the industry.