The Ethiopian construction industry accounts for 23.2% of the GDP after the agriculture sector, but since 2008, the annual growth of the sector has been decreasing significantly. The construction industry sector accounts for 4 to 6 percent of GDP in developed countries and 4 to 12 percent in developing countries. According to recent studies, the sector accounts for an average of 13 percent of world production.
Ethiopian construction industry consists of commercial, industrial, residential, institutional, infrastructure, energy and utilities construction sectors. Small and medium construction companies operate in the informal market and local and foreign companies operate in the formal market. The involvement of foreign companies is dominated by Chinese companies which are undertaking large projects. The construction market in Ethiopia is projected to grow at an annual average growth rate of more than 8% to 2026. The country’s 10-year development plan includes infrastructure development and the objective of public-private partnerships.
Though Ethiopia is working on mega development like Addis Ababa Corridor, the Nile Dam and scores of other smaller projects, the construction industry is faced with challenges. In the 10-year government plan, four point four million new houses and many road constructions are planned in the sector.
According to construction industry experts, rampant corruption, bureaucratic hurdles, security problems, rising prices, dependence on external resources, delays in payment processes, and the existence of a high level of regulation are the issues that hinder the sector. Price fluctuations and lack of foreign currency in the construction industry are issues that require special attention from the government.
Construction industry is one of main job creators in Ethiopia. Increased government focus and insight, better regulatory laws and incentives to local construction companies can help the beleaguered sector.
Ministry of Urban Development & Construction (MoUDC) last year launched draft of the construction industry development policy. The draft policy took year and a half to be prepared. The final draft of the policy, together with the draft proclamations to establish the Construction Industry Council and the draft Construction Industry Licensing Proclamation were also discussed. The sector is need of a long term policy with clear guidelines and regulations.
Read more…
Ethiopian Electric Power EEP Exceeds Domestic Revenue Goals
Unless internal conflict is stopped and rural road networks are safe, the economy that supports industrialization and construction industry and the rest of interrelated economic functions are allowed to freely operate, then, it means we are on our way downhills.