Govt spending spurs demand for construction inputs

22 May, 2023 - 00:05 0 Views
Govt spending spurs demand for construction inputs

eBusiness Weekly

Business Writer

Government spending on construction has markedly increased in the past few years, some industry players said, giving the already booming sector an additional impetus.

Over the past four years, the Government stepped up infrastructure construction to spur growth and to boost domestic demand-with industry players-from the suppliers of inputs such as bricks, aggregates, and cement benefiting.

Even before the acceleration of the Government projects, the country’s construction industry had already been firming, fueled by investments in home building particularly by people working outside the country, and private sector investments.

The implementation of devolution has also provided the impetus to the growth of infrastructure development as substantial amounts of funds have been released towards the construction of social amenities, learning, and healthcare facilities.

Chief executive of BETA Holdings, the country’s largest supplier of bricks, Godfrey Manhambara, said the company had over the past few years witnessed a massive surge in demand, fueled by public sector projects.

“There is massive additional demand coming from the Government,” said Manhambara. “Previously, orders from the Government would account for about two percent but they have grown to around 20 percent.”

At the current trajectory, Manhambara, whose company also produces aggregates, projected demand for infrastructure inputs would double in the medium term.

The Construction Industry Federation of Zimbabwe said various ongoing Government projects were stimulating infrastructure development across the country.

“The industry is doing very well,” CiFOZ chief executive Martin Chingaira said. “We have seen a number of projects from the government including housing, roads, and dams being implemented; and of course increased business, particularly for smaller contractors coming from big firms contracted by the Government.

Khayah Cement, formerly Lafarge Zimbabwe is already forecasting growth in the industry.

“The overall market demand continues to grow driven by the individual home builders segment as well as ongoing major Government infrastructure development projects. “The company is well positioned to take advantage of this growth and the increase in installed capacity,” the company said in a recent trading update.

A booming construction industry creates a massive direct and indirect multiplier effect on the socioeconomic environment. Directly, it provides job opportunities for skilled and semi-skilled people while creating domestic demand along its entire value chain.

 The Treasury has been prioritizing infrastructure development such as housing, dams, roads, schools, and hospitals, a departure from the previous norm when the bulk of the budget was channeled towards recurrent expenditures such as salaries.

In line with the Government’s vision to propel the country to become an Upper Middle-Income Society by 2030, scaling up infrastructure investment and delivery from both the public and private sectors has been identified as one of the pathways to unlocking sustainable economic growth and development and provides the resilience necessary for the country to respond to adverse exogenous shocks.

This year, the Government plans to spend $1,1 trillion on infrastructure, with funding coming from taxes, loans, statutory funds, and from development partners.

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