via Cash constraints stifle construction projects – NewsDay Zimbabwe September 8, 2015
ZIMBABWE’S construction sector is reeling from severe effects of the prevailing liquidity crunch with major projects being suspended over lack of funding resulting in diminishing revenues, an official has said.
BY MTHANDAZO NYONI
Zimbabwe’s economy is in distress with Finance minister Patrick Chinamasa in July lowering economic growth projections to 1,5% from the initial 3,2%, citing drought which lowered agriculture output by 8,2%.
However, the World Bank has said the economy will grow by 1%.
Zimbabwe Building Contractors’ Association president Obert Sibanda told NewsDay the construction industry is under siege due to economic slowdown.
“At the moment the construction industry is a bit depressed due to economic slowdown. We don’t have more projects going on. What I can tell you is that we are on the lower side,” Sibanda said.
“For the past six months, we had very few projects that we worked on, the major one being the Plumtree-Mutare Road. Some of the projects were suspended due to lack of funding. Our survival is largely dependent on economic revival.”
Local contractors have been driven out of business by Chinese firms that are behind a number of construction projects currently ongoing in the country.
The industry continues to reel under critical funding constraints as local banks impose stringent borrowing conditions against the background of liquidity challenges.
Last year, the Construction Industry Federation of Zimbabwe (Cifoz) revealed that the construction industry was operating at about 20% to 30% capacity.
Cifoz said lack of government and private sector contracts and the liquidity challenges were the major factors contributing to the low capacity utilisation.
It also revealed that lack of huge capital inflows and major national development projects were some of the constraints cited by stakeholders in the construction industry.
Zimbabwe has a housing backlog of over 1 million units.