BY TATIRA ZWINOIRA
ZIMBABWE’S construction industry contracted by 6,3% percentage points last year due to acute cement shortages and unsustainable prices of construction materials, a Treasury report has shown.
According to the 2018 fourth quarter Treasury report, the 2018 construction industry is estimated at 7,7%, a downward revision from the initial growth projection of 14%.
“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 to US$14 in August 2018 to between US$35 and US$45 per 50kg bag,” the report read.
It added: “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 the rising and unsustainable parallel market exchange rates.
“These shortages started in earnest beginning of August, as shortages of foreign currency to procure spare parts, raw materials, packaging materials and equipment also negatively impacted on the growth of the construction industry.”
Treasury reported that for 2019, growth of the construction industry would continue to be bolstered by activities to do with “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,” Treasury said.