By Hilary Mare
ACCORDING to Simonis and Storm Securities (SSS), the recession currently being experienced in the construction sector will be a prolonged one, as the government revenue squeeze continues.
Frans Uusiku, an economist at the securities firm, highlighted that government has always been the main driver of the construction industry, and as long as State spending remains subdued, the sector will remain under pressure.
“Although the notable contraction in the number of building plans approved, and buildings completed, to date, has relatively improved from 12 months ago, we still believe that the recession in the construction sector may be protracted. This is because most construction activity that drove output in the past was government activity, (through the) construction on mines and roads, which have come to a standstill, as the government revenue squeeze lingers,” Uusiku said last week.
The number of building plans approved within the Windhoek municipal area by July 2017 contracted by 6.2 percent for the year to date, to 2050 units, compared to a contraction of 27.5 percent for the year to date in July 2016.
On a monthly basis, building plans approved contracted further by 31.5 percent, compared to a growth of 8.1 percent in the previous month.
The number of buildings completed also contracted by 16.2 percent for the year to date, to 354 units, compared to a contraction of 41.7 percent for the year to date in July 2016.
On a monthly basis, buildings completed rebounded by 94.7 percent, after a contraction of 62 percent was recorded in the previous month.
This was ascribed to 138.5 percent month-to-month increase in the ‘house’ category.
“In monetary terms, the value of buildings completed continues to contract by 4.1 percent for the year to date, to N$431.5 million in July 2017, compared to a contraction of 33.1 percent for the year to date in July 2016. This suggests a declining trend in the level of inflation, in our view,” Uusiku added.
Earlier this year, the Construction Industries Federation (CIF) of Namibia said that 63 percent of construction businesses have either closed down, are dormant or have scaled-down their operations drastically.
“Between 1 September 2016 and 31 March 2017, a minimum of 30 percent of the workforce was retrenched,” the federation said in a statement.
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