CHAMWE KAIRA
With local construction firms losing ground to foreign competitors and tenderpreneurs, Simonis Storm Securities said this week that it remains negative on the outlook of the sector’s profitability and contribution to employment going forward.
“If local construction companies cannot even participate in the construction of a highway between two small towns in the country, one wonders whether they will be able to participate much in the mega projects planned in the South,” the firm said.
Simonis cited the fact that only three Namibian construction companies made the short-list of bidders for the road reconstruction project between Karibib and Usakos, offered by Roads Authority.
Construction Industries Federation of Namibia contended this decision stating that financial prequalification and technical requirements were unreasonable for Namibian construction companies as no Namibian company has covered this amount per year.
Commenting on building plans, Simonis said it is expected that elevated living costs will weigh on consumer demand and so affordability for new loans for buildings can deteriorate, resulting in a further contraction in number of plans submitted to municipalities and thus the construction industry.
“High interest rates and a rise in building costs have also led to the postponement of construction of building plans that have been approved in the past. Therefore, even though plan approvals increased, we do not expect actual construction activity to commence in the near-term.”
Simonis said pipeline building activity has improved since April but remains bleak on an annual basis. Building plan approvals declined in Windhoek (18.9%) and Swakopmund (50%) during June.
Building plan data from Windhoek show an uptick on a monthly basis in plans being approved during June 2023, up by 14.8%, from 176 to 202 approvals while Swakopmund again reported only 45 plans approved, same as May. In the first half of 2023, 1263 projects were approved compared to
1,615 projects in the first half of 2022, a 21.8% decline in approvals.
This indicates that near-future construction activity is expected to be low, Simonis said.
At the same time, actual construction of projects took an upward turn in Swakopmund. Building
completions decreased by 33.8% in Windhoek but rose by 694.4% in Swakopmund in June.
“Completions were mainly focused in residential buildings, accounting for 57% of projects completed, while additions and alterations accounted for 43% of all completions.”
