Compliance expensive in construction industry
MBABANE – One of the key issues identified by the construction industry players that need to be addressed by the Construction Industry Policy is the financial constraints faced in the industry.
During the stakeholder engagements held in the four regions of the country from November last year till February 2024, it was uncovered that some of the challenges identified in the 2001 policy were still persistent in the industry. One of the challenges was that compliance was quite expensive in the Construction Industry, as it constitutes of not just the construction industry registration fees, but the environmental fees, municipal fees and other taxes are escalating the cost of doing business. A small company may pay up to E30 000 in compliance fees before implementing a project.
According to the stakeholder engagement report compiled by the
Eswatini Economic Policy Analysis and Research Centre (ESEPARC), financial constraints, due to lack of cash flow, lack of capital for projects, difficulty accessing loans, delayed payments and high costs of operation, emerge as significant hurdles for businesses. Financial strain is exacerbated by the high subscription fees, levies and taxes. Another key area that stakeholders highlighted during the survey was the issue of delayed payments. This appears to be a widespread issue, affecting many businesses. It indicates a significant problem with cash flow management and financial stability within the industry. Government-funded projects are especially cited for delaying payments after projects are completed. This has caused a trickle-down effect, affecting the operations of companies in the sector.
They also lamented the issue of competition. High competition within the industry is reportedly leading to lower profit margins and pressure to lower prices.
Competition
This has been demonstrated in companies lowering prices unduly to attract tender offers for the lowest bid. This is implemented at the cost of implementation which affects the overall outcome. Unfair competition from bigger or foreign companies has been persistent in the industry.
Many further respondents during the survey mentioned the scarcity of jobs, indicating a high level of unemployment or underemployment within the industry. There is a high level of dissatisfaction with the unfair
distribution of projects and tenders in the industry. Many respondents point to the scarcity of jobs in the industry, indicating a high level of unemployment or underemployment within the industry. Furthermore, corruption was mentioned multiple times in the survey suggesting a lack of transparency and fairness in tender allocations and project awards. Respondents pointed to unfair competition and corruption in the tendering process.