Construction Industry: Success And Challenges

New Era (Windhoek).- THE role-players in the construction industry in Namibia are the suppliers, the contractors, the consultants and the financiers. The government being the biggest employer in the industry is mainly responsible for creating jobs through public works, for example, buildings, railways and roads.
The suppliers are mainly importing building materials from the Republic of South Africa (RSA) with very limited local manufacturing, for example, cement bricks, paint and precast concrete products.

It is worth mentioning that there are only few suppliers of building material in Namibia. This has led to high prices of goods since there is no competition in many towns and villages. The long established suppliers tend to cede contracts of SMEs while they only give them small credit on material, thus controlling their growth. There are even very few black suppliers of building material.

The contractors are the "pistons" in the "engine" of the construction industry. They get things done. The traditional body representing the contractors in Namibia is known as the Construction Industries Federation (CIF).

This body has been representing the well-established contractors with very low, if any, membership from the historically disadvantaged community. After independence, the government facilitated small historically disadvantaged contractors to participate in the government construction tenders. This was through unbundling of large tenders and by standardizing documentation of a classroom program initiated by the Ministry of Education to address a huge backlog left by the colonial administration. These contractors formed their own association in order to be counted. As an example, the Namibia National Constructors Association (NANCA) was formed with members in the Omusati, Oshana, Oshikoto, Ohangwena, Kavango, Caprivi and Khomas regions. Small contractors were also trained in labour-based works in the construction of rural gravel roads.

The government saw it necessary to have one body representing all the stakeholders in the construction industry. The first meeting was therefore convened in Windhoek in 1993. Apart from the Construction Industries Federation (CIF), the majority of such contractors were from the historically advantaged backgrounds. A national committee was elected and it sent a delegation to several SADC initiative meetings on the construction industry.

Also, after independence, our government introduced an open market economy which brought international construction firms to Namibia. This brought tough competition in the construction industry. The introduction of black firms and international companies helped to stabilize the escalation of the capital costs for the past ten years - the profit margin was reduced to 10%-15%. Thus, our government was able to buy more with less. This was achieved by empowering the historically disadvantaged Namibians while promoting free trade at the same time.

The consultants in the construction industry are mainly architects, engineers, quantity surveyors and project managers. Most of them are white male and females with an exception of five black Namibian registered professionals who are running their own consulting firms. Two architects and three engineers. This skewed image has resulted in many communication problems between the white consultants and the black contractors with heavy racial overtones. Most of the project specifications are written in a way which exclude most black contractors. The few who qualify to be evaluated are out-motivated for the reason that they are not known to consultants. This is against the government policy and regulations. There is therefore a need to train government officials in scrutinizing the project specifications not only to be inclusive but also to be user-friendly. There is also a need to have a clear policy which encourages designers to specify local building materials. I strongly believe that the ultimate solution in empowering our small builders is in training our own young people here in Namibia to become professional staff and consultants. They will be responsible for our building environment. This will help to fulfill the goals of our Vision 2030.

The financiers have an important role to play in the industry. They are expected to issue letters of intent as well as bank ratings to their clients who are tendering on construction jobs. The historically disadvantaged individuals in the high-risk industry like construction find it difficult to be creditworthy at their banks. The small black companies are still struggling to get performance guarantees from their banks to start and finish small government building projects within a stipulated time frame of four months. Staying longer on site means losing their profits.
In order to redress the historical imbalance, our government introduced some legal "tools" and "vehicles" which include:

-The Policy on Equity
- The Tender Board Act of 1996
- The Affirmative Action Policy
-The Nation Wide Improvement of Physical Facilities Programme
-The White Paper on Labour Based Works
-The Recruitment of Ex-Combatants
-The Social Security Commission
-The Employment Equity Commission, and
- The Rural Electrification Programme.

The Nation Wide Improvement of Physical Facilities Programme was introduced 14 years ago by the Ministry of Education and Ministry of Works, Transport and Communication to tackle the backlog of school buildings especially in the rural areas that were affected by the war. The programme was based on the concept of unbundling to allow small contractors to tender even for one school, which meant even one small building, according to their financial, managerial and technical capacity. The performance guarantee was reduced from 10% to 5%. At the moment more than 150 small contractors are participating in this programme countrywide.
The Labour Based Roads Construction Programme was also started by the Department of Transport 12 years ago with pilot projects. More than 10 small black contractors were trained. This training programme needs to be continued. The Ministry of Mines and Energy have also started engaging small contractors in rural electrification projects by unbundling large tenders. Many more programmes could be implemented to ensure job access for SMEs throughout the year.

The Success Story
The empowerment success story should be measured by the maximum participation of the target groups in empowerment schemes and having tangible results on the ground.
At least 90% of the budget of the National Wide Improvement of Physical Facilities Programme is directly spent by the black businesses in the construction industry. This includes women owned businesses. The rest of the government construction tenders are also partly benefiting the historically disadvantaged target group through joint ventures and sub-contracting.
It is also important to mention that small contractors are joining hands by meeting at marketing level in order to gain strength and recognition. This free association has guaranteed the government that:

- When one member contractor fails to deliver, other members will complete the project within budget, time and of good quality while they discipline the other member.
- Member contractors are sharing skills and knowledge.
- Material suppliers will be encouraged to do business with a large group.
- Workers employed by the contractors of the same associations will earn uniform wages which promote health labour negotiations.
- Training is easy to do through one office which represents its members.
- Follow-up on latent defects is possible through the association's office.

The government manages to spend the budget while empowering the SMEs. More people, including ex-combatants, are employed in the construction industry and the risk of losing their jobs is spread thin by the number of SMEs.

Challenges
- There are challenges which need to be addressed in order to speed up the empowerment process and widen the scope thereof.

- As there is no uniformity in the way different levels of government procure, the policy on policy works which will eventually lead to the Public Works Act is needed to bring harmony the way we procure with public funds.

- There is a limited scope in empowerment programmes and projects. The few which are running are only seasonal. It is therefore essential to widen the scope to include other sectors and stagger them throughout the financial year. This will ensure job availability to our SMEs at all times.

- Target groups do not have a guarantee to remain in business due to the unfair competition from bigger businesses and international companies. It is therefore necessary to categorize construction tenders and professional appointments. It is also better to guarantee SMEs an incubation period of at least three years.

- The banks are still reluctant to issue performance guarantees to SMEs which win government tenders. It will be good to create a package which will automatically guarantee SMEs all necessary support especially in financial and management issues.

The manufacturing of local building material like granite, marble, flat stones and lime needs to be promoted. This will help to develop our buildings and infrastructure with local content. It will create jobs to more Namibians. The continuous research and documentation of our building material is long overdue.

The education and training in Namibia does not adequately address the needs of the construction industry. This is why we still have more than 75% of the professionals (engineers, architects, quantity surveyors and project managers) above the age of 50 years. This is also why more than 90% of the SME contractors cannot fill out traditional tender documents. A sustainable training budget is therefore needed. We need to legislate a Training Levy concept to address this problem.

The construction industry gives direct benefit to the economy through capital projects and maintenance contracts. The impact is normally felt instantly on the ground as the buying power is brought to the people in all corners of Namibia. It is therefore important that empowerment tools and vehicles be redefined and streamlined in order to benefit the target groups. Most of all there is a need for a collaborative effort by all players - especially the political commitment cannot be substituted by any other effort. The number of employees in the construction industry could be tripled if co-ordination is done with dedication and these proposals are implemented without delay.