The Sunday News
Exonomic Focus with His Excellency, President E. D Mnangagwa
Construction boom
Zimbabwe is on the cusp of a construction boom. Construction writ large, including in infrastructures, in residential and non-residential structures, both for public and private sectors, and both in urban and rural spaces. Even factories, which the economic downturn had reduced to tumble-down, derelict state, are now undergoing renovation, or getting replaced by entirely new, modern structures which are second to none. The upward trajectory in the economy now vividly mirrors in this buoyancy in our construction industry.
On course to meeting housing targets
Government set this off through its many infrastructural projects: the highways, dams, irrigation facilities and countless social infrastructures, including schools, colleges, clinics and hospitals. Much of the social infrastructures have been built under the devolution programme, making them nationwide in spread. I am happy that business quickly took cue, guided by our National Development Strategy 1(NDS1), which envisages delivery of 220 000 housing units by 2025. The private sector has already delivered 145 000 housing units, with more than the remainder coming from the public sector and local authorities. We are on course to meeting our housing goal under NDS1.
Town-country chasm narrowing
Even more pronounced has been private constructions, especially residential. Zimbabweans, including those in the diaspora, have been building homes of all sizes: from start-ups to family homes and even mansions. All this speaks to a strong ownership ethic in our people, and an exceptional savings level which often go uncelebrated. This trend reflects in the rural sector, at growth points especially, where modern, upmarket structures are changing the rural landscape. As your President, I am happy that our policy of leaving no one and no place behind is taking emphatic shape. The traditional chasm between town and country is narrowing, even closing in some cases. It has now become a norm rather than an exception to see working families commuting from their homes at various growth points to get to workplaces right in towns and cities. Clearly this underlines the fact that the rural-urban nexus is now reciprocal and mutually reinforcing.
Malls, supermarkets, wholesalers
Construction in non-residential areas is similarly picking pace. There is greater demand for office space and for factory units, both big and small. All that suggests expanded activity in the economy, for which construction becomes some derived demand. Developments in the retail sector have been quite exciting, in line with greater manufacturing activity in the economy. Shopping malls, supermarkets, wholesalers, roadside mini-markets and eateries along highways are now a dominant feature, as too are gated settlements with self-contained, ultra-modern facilities.
A clear trend of suburbanisation is evident in almost all towns and cities, as retail and related activities spread out and disperse beyond traditional town and city centres.
Even smaller towns and growth points are beginning to attract big brands, evidently pointing to strong disposable incomes in the countryside. This partly owes to our successful agricultural programmes, which have raised rural incomes and thus attracting more businesses.
Rising demand for building materials
Another indicator of the buoyant construction industry comes by way of the proliferation of hardwares and tiles manufacturing companies and outlets, including international ones. Similar trend show by way of cement projects whose footprints continue to expand in the country. There is a very healthy demand for building materials, including bricks. In respect of the latter, more and more brick-manufacturing companies have come on stream, thus bringing much-needed competition in ways that redound to the industry. As our iron and steel plants come on stream, I foresee even greater activity in the construction sector.
Demand for specialised services
The construction sector is underpinned by several services, including various sub-disciplines of engineering, architecture and surveying.
Demand for these services and skills underpinning them has been rising.
Thankfully, our tertiary institutions now have the capacity to deliver these specialised skills to the construction industry, thus taking it to a higher level. I am also happy that more such skills are repatriating themselves back home after years of invaluable exposure in more advanced jurisdictions. This means our fresh college graduands have more opportunities for mentorship, attachments and on-job exposure.
A sector of many models
Construction is a key component of our Gross Domestic Product (GDP). It enjoys complex linkages with various sectors of the national economy, both vertical and horizontal. It is labour intensive, and thus a key source of employment. Because of very few entry barriers, the construction industry provides a wide range of enterprise models which drive it.
We have large construction companies, some with international links. We also have several home-grown companies which are beginning to get contracts beyond our borders. Above all, we have small partnerships, sole proprietorships and small-to-medium enterprises in this sector. All this provides variety and colour to the industry, including opportunities for subcontracting partnerships.
Harnessing construction multipliers
More significantly, construction enjoys larger multipliers we must harness as an economy.
Every dollar invested in construction yields larger returns and benefits to the overall economic output, and by way of employment benefits. In United States of America, for example, studies show that every dollar in construction outlay multiplies to GDP increase of $3,02. Besides, it is an industry with a high job and earnings multipliers, quite apart from increasing the national stock in fixed assets. It therefore follows that the performance of our national economy is highly correlated with the performance of the construction industry. We thus must continue to stimulate this vital industry as best we can.
Inflation must be fought
Looking ahead, several interventions are needful. First, we have to keep fighting inflation. The cost of money must remain low to stimulate investments in, and to encourage borrowing for, this sector. That includes the mortgage sector. We have to fight rising costs in the building industry, principally those related to building materials. This will allow more construction activity in the country, in line with our NDS1.
Absorbing new technologies
Second, our construction industry must continue to invest in new technologies which bring greater efficiencies while meeting the needs of our fragile physical environment and ecosystems.
The use of steel and aluminium will go quite some way in ensuring more housing units are delivered in the shortest possible time, at least cost, while meeting environmental standards. The iron and steel projects underway at Manhize and in Masvingo should greatly assist.
Taming informal settlements
Third, we have to deal with the problem of informalisation of human settlements, which has a direct bearing on the construction industry, principally the residential sub-sector. All unplanned settlements need to be regularised after proper geo-spatial surveys and proper land-use plans which protect our delicate environment, principally our wetlands and water sources. I am happy that the Ministries of Housing; Higher and Tertiary Education; Local Government; Lands; Justice; and Environment are working in harmony, all in the spirit of whole-of-Government approach. Once regularised, homeowners must be given title to secure ownership.
Providing basic amenities
Fourth, we have to find a formulae for delivering basic amenities and services at all settlements. Broken and dysfunctional municipalities have cost us greatly, including creating chaotic settlements which do not have even the most rudimentary amenities. Central Government might have to intervene to ameliorate this sorry situation. The hazards to public health are enormous, and require very urgent preventive interventions.
Densification of settlements
Fifth, land for construction is finite. We thus have to move towards densification in our human settlement plans so we use residential and non-residential construction land optimally. I am happy this is beginning to happen, including at rural growth points where blocks of flats for Government workers are now being piloted, Mutawatawa in Uzumba-Maramba-Pfungwe being a case in point. Our human settlement plan requires that 40 percent of allocated land should go towards construction of flats.
Amenities for rural settlements
Sixth, while rural housing has been progressing remarkably well, especially at rural growth points, I am concerned that the supply of key amenities, including water, sewer services, all-weather roads and electricity, seem to lag behind.
My decision to upgrade the old District Development Fund (DDF), to a Rural Development Authority was partly prompted by this concern. The Authority has to work closely with rural councils to ensure the burgeoning rural settlements are backed up by needful amenities. This thrust should also ensure traditional Blair toilets are upgraded to modern flushable systems. With our plans for rural industrialisation, it is critically important that we plan for bigger, agglomerated settlements in rural areas.
Insuring rural homes against risks
Seventh, and related to rural housing, I am happy that alternative sources of power are being harnessed to service most modern rural settlements. This is in line with our goal of removing households from our national power grid through solar technologies. What makes me anxious is that new, ultra-modern housing structures which are being built in rural areas do not enjoy insurance cover. I therefore task the insurance industry to come forward with suggestions for Government to consider, so this urgent area is addressed. These high-value investments must be secured against all manner of risks, as happens in urban areas.
Mortgages for all
Eighth, I am happy that the area of mortgages is now receiving attention, with the relevant ministry developing three models which ensure more Zimbabweans, including those in the diaspora and in informal employment, are able to access homes and properties. In the same vein, I want to encourage insurance and pension funds to do more to increase supply in housing.
Factoring Construction in our GDP
Ninth, and quite critical in my view, we need reliable data so output and value in the whole construction sector is captured and reflects in our Gross Domestic Product (GDP).
This is not happening currently, resulting in an unhappy situation where our GDP is understated and undervalued. I challenge the construction industry to work with relevant Government ministries to ensure value in the construction and real estate sectors is scientifically recorded and fed into our GDP figures so we know what our real worth is as an economy.
Indeed, while much is happening already in the construction sector, a lot more remains to be done.
