‘Long term funding must anchor construction sector growth’

THE financial services sector should avail long-term funding packages at affordable lending rates to drive sustainable growth of the construction sector in the country, prominent Bulawayo businessman and former Zimbabwe National Chamber of Commerce (ZNCC) president, Mr Obert Sibanda, has said.

Zimbabwe National Chamber of Commerce

While acknowledging Government’s increased momentum in driving key infrastructure projects in the country, Mr Sibanda said there was a mismatch in terms of funding models when compared to ongoing infrastructure projects.

He said private sector financing was minimal, pointing out that financial institutions were offering short-term financial support against projects that require sustained long-term financial backing.

This tends to stall sectoral growth and limits economic growth capacity, said Mr Sibanda, adding that the viability of the construction sector is critical given its wider value chain impact and job creation potential.

Nust students complex

“I’m very optimistic in terms of the Government approach to infrastructural projects taking place countrywide. It shows that if all the planned projects are carried through, there will be a massive turn-around in the economy,” he said.

“All these projects are using short-term funding, which has a lot of unintended consequences. If the economy is not doing well, only short-term funding will be available and the construction sector is the first to suffer and last to recover.

“With short-term capital, it’s difficult to run a successful project. If we access long-term funding, there will be a huge turnaround in the sector. Our appeal is for the sector to access long-term funding at reasonable rates,” said Mr Sibanda.”

In line with the National Development Strategy (NDS1) ideals, the Second Republic led by President Mnangagwa has championed several high-impact infrastructure development projects across the country, which are at different stages of completion.

These include road rehabilitation, housing development, dam construction, as well as schools and hospitals, among others.

“My view is that the Government should seriously focus on housing construction. It has the capacity to steer economic growth, as it has ripple effects into other sectors,” said Mr Sibanda who is also past president of the Zimbabwe Building Contractors Association (ZBCA).

Zimbabwe Building Contractors Association

“For instance, the construction sector is labour intensive, meaning there will be a lot of employment and downstream benefits. Suppliers of cement, pitsand and other key requirements will be kept busy and accelerate development.

“The insurance sector would also want to insure houses that are built. The furniture sector also benefits as owners would want to furnish the property. So, the economy benefits a lot from the construction sector.”

Mr Sibanda said due to limiting factors, only a few new infrastructural development projects were being rolled out in Bulawayo with private sector players, especially banks, renovating their structures.

He said it could be that prospective investors are seeing less value in doing business in the city.

“There are not many new infrastructure projects coming up in Bulawayo such as malls. Maybe the economy in the region is not all that vibrant to attract investments,” said Mr Sibanda.

“Business people are very rational, they follow where there is business value. The construction sector is not a stand-alone industry, it’s a sector that provides services to other sectors. If the economy turns around in Bulawayo and investors will realise the need to construct malls and other infrastructure, such projects will take off.

“What is necessary is to have certain institutions or banks such as the National Building Society (NBS) that the Government is involved in to be pushed to have a deliberate effort to be involved in low-income housing construction, Bulawayo included.”

National-Building-Society

Government has a target to deliver 220 000 housing units by 2025 as prescribed under the National Development Strategy 1 (NDS1), which builds momentum towards realising Vision 2030. Delivering affordable and quality settlements in urban and rural areas is one of Government’s core targets to improve access to affordable and quality housing and social amenities under the economic blueprint.

Zimbabwe has a national housing backlog of around 1,5 million units and targets to deliver 1,2 units by 2030. Part of the vision is to change the face of Zimbabwe by building modern houses that are sustainable and environment friendly.-ebusinessweekly