The construction industry has been hard-hit by Government spending cuts, with 10,000 job losses recorded as a result, according to figures by the National Union of Namibian Workers.
The industry was forced to lay off workers after Government payment delays and halting of some of its construction projects.
The Construction Industries Federation (CIF) of Namibia has urged Government to secure the survival of the construction sector by contracting Namibian-owned firms for future construction and building projects, irrespective of the size of the development budget.
“We understand that our Government and, especially our Minister of Finance, are faced with an extremely difficult task. We understand that cutting expenditure is necessary for the long-term sustainability of our economy. However, we hope that the budget cut for capital projects would be minimised and that instead there will be efforts to significantly cut operational expenditure.
“It is important that we still remain focused on constructing our key infrastructure, such as the development of infrastructure for the optimal supply of water and energy, as well as the development and further improvement of key roads.
“There is also much scope for maintenance, renovation and the sanitation of buildings and infrastructure,” Bärbel Kirchner, CIF Consulting General Manager said.
According to a survey undertaken by CIF early this year, to which 122 responses were received, 43 respondents (34 percent) said they will either close down their businesses or will have to declare bankruptcy.
A further 49 respondents (40 percent) said they will scale down their businesses drastically or become dormant. This would mean that capacity of 74 percent of these businesses would no longer be utilised if they were not to benefit from any Government contracts.
Nico Badenhorst, president of the CIF, also said it was extremely important that Government acutely focuses its efforts to supporting Namibian contractors.
“At times like this, the Namibian family must come first,” he said.
The membership of the CIF ranges from companies with an annual turnover of over N$200 million to SMEs with an annual turnover of less than N$1 million.
Eloise du Plessis, Head of Research at PSG Namibia, believes due to the focus on curbing capital expenditure, the budget cuts have also worsened the slump in the construction sector, which has been a major drag on overall economic growth.
“It is absolutely necessary that the Government settles its outstanding debts and establishes the Infrastructure Fund in order to support a much-needed recovery in the construction sector.”