HomeNewsFinancial institutions crowd out construction firms

Financial institutions crowd out construction firms

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CONTRACTORS in Zimbabwe and other players who live off the fortunes of the business have been sidelined by the widespread and direct involvement of the financial sector in construction.

BUSINESS REPORTER

A number of financial institutions in Zimbabwe are rolling out land sale and construction projects across the country, among them CBZ Holdings, FBC Holdings and CABS.

Insurers such as NICOZ Diamond Insurance and Fidelity Life have also joined the bandwagon.

Chamu Chiwanza, immediate past president of the Construction Industry Federation of Zimbabwe’s Mashonaland Region, said although the economic situation prevailing in the country was dire, government could step in to salvage the situation.

“Company closures have had a ripple effect on the construction sector. The industry is traditionally dependent on the financial sector for the construction of major buildings and industrial plants all of which have a positive effect on the economy,” he said.

He said the first quarter of the year up to now had dealt the sector a huge blow including other ancillary companies that exist off the fortunes of contractors.
Chiwanza said contractors were unable to pay salaries while the very people who were giving contractors work were unable to service payments adding there was no increase in activity.

“The best way to salvage the situation is for construction companies to be precisely what they are. We can’t have a monopolistic situation where financial institutions are involved in construction, and they are eliminating contractors who employ thousands of people,” he said adding that the Finance ministry and Local Government must participate in the revival of this critical sector.

Construction industry player Tinashe Mutarisi, who is also the managing director for Nashpaints, said the poor economic performance and attendant negative effects on the sector had forced the company to adopt innovative methods for survival.

“We are presently the only paints product company offering services on credit to civil servants and the private sector. However, the liquidity crunch and absence of credit facilities is a challenge affecting virtually every business,” he said.

“We have focused on diversifying market outreach through opening several branches around the country as well as franchising facilities for other budding entrepreneurs.”
The company runs a paint manufacturing plant with production capacity of 15 000 litres
of paint per day, but was not
operating at full capacity as
industrial construction projects wane.
Real estate firm Knight Frank recently said the state of affairs was calamitous in the industrial space, which had been affected
by company closures and downsizing effectively making it the least attractive segment for investment.

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