Gov’t shines light on demerits of spending big on construction
Big 5 Construct exhibits in Addis
Government’s high engagement in the construction sector has come at a cost of inflation, balance of payment pressure and debt risk, the Ministry of Finance underlines.
Speaking on the opening ceremony of the Big 5 Construct Ethiopia exhibition Ahmed Shide, Minister of Finance pointed out that over the last 15 years, the government has heavily invested on massive infrastructures including road networks, railways, airports, irrigation development, and expansion of universities.
Nevertheless, as the Minister contrasts, despite the merits of the projects whose outcomes are rapid economic growth, the flipside has led to inflation, debt risk, as well as a balance of payment pressure. “The government for the last few years has been working a lot on the home grown economic reform agenda to sustain and achieve fast economic growths and to have a price stability on the economy as well as sustainable balance of payment availability,” Ahmed stated, adding, “As part of the home grown economic agenda, we are working to rebalance the role of the State in terms of investment, and in encouraging more private sector engagement in to the economy. The government is now paving the way for meaningful and significant private sector development in the economy.”
In recent years, it is well known that government has mainly been investing in infrastructure developments including parks, palaces, roads, railway, irrigation systems, housing and industrial parks. “Significant portion of our budget goes to infrastructure related activities for which construction is atop,” the minister cited indicating that the government will continue to maintain its strategic investments only on huge flagships such as hydropower dams.
On matters exhibition, the first edition of the Big 5 Construct took place from 18 to 20 May 2023 at the Millennium Hall in Addis Ababa, Ethiopia. Highlighting the top opportunities, products, services and stakeholders in Ethiopia’s construction industry, the exhibition brought together 6,000 plus building, construction, and infrastructure professionals to network, inspire growth and uncover the latest trends and innovation in construction.
“The exhibition is aligned with the objectives of the nation’s 10-year perspective development plan, Ethiopia 2030: The Pathway to Prosperity, particularly the goal to prioritize a thriving construction sector. The country offers many prospects in industries including construction, manufacturing, and infrastructure,” said Chaltu Sani, Minister for Urban and Infrastructure while endorsing the exhibition.
At least 15 countries comprising 100 plus manufacturers and distributors exhibited their latest products and services, innovations and solutions pertaining to the full construction cycle from inception to completion in the Ethiopian construction industry. Availability of foreign currency, lack of raw materials and construction products, bureaucracy are said to be some of the challenges in the construction sector. “Government has given significant incentives for the construction sector in general terms of making free of charge importing materials, supporting the capacity building of local construction and in addressing some of the micro economic challenges like inflation, and Forex,” said Ahmed, adding, “To enable investors to best navigate forex challenge for strategy investors, we are going to allow the convertibility and transferability guarantee as part of PPP o r a joint ven ture project in volving either publisher of trade magazines and information services, alongside Ethel Events & Communications as its local partner.
According to global data, the size of Ethiopia’s construction market reached USD 41 billion in 2021. Its average annual growth rate is expected to increase by more than 8% over 2023-2026, indicating a promising future for the industry. Whilst key sectors for growth include construction in the industrial, commercial, residential, energy and utilities and infrastructure sectors.