Is Ghana’s construction sector growing to the ‘detriment’ of local industry?

    The construction sector, over years, has grown averagely at an estimated rate of 7 percent annually from 2009 to the third quarter 2017.

    However, how much of this growth cannot be credited to indigenous Ghanaian companies in the country?

    Most of the big ticket construction works are being carried out by means of foreign direct investment (FDI), which comes along with its own conditions.

    Local construction industry players, for years, have incessantly complained of not being able to get a fair chunk of business within the sector.

    This is hampering the capacity building of local construction companies and the growth of the sector in general.

    After 60 years of independence, the country cannot boast of a local content policy for the sector, which is key to the development of critical infrastructural in the country.

    How then can we, as a country, have enough control over our construction industry and benefit from the immense potential of the sector?

    A valuable gauge in measuring a country’s success at promoting its local content, among other things, is the ability to secure direct and indirect opportunities for employment, as well as supplying the goods and services, required as inputs by industry, from local sources.

    Over the years past, foreign construction firms most at times do not purchase inputs from local indigenous suppliers, but rather from suppliers of home country operating in Ghana.

    The underdeveloped nature of Ghana’s construction industry makes it vulnerable in the face of global competition especially in a market where there is inadequate information flow.

    Currently, due to the critical need to correct this anomally, the sector, led by the Association of Ghana Industries (AGI), has put together a draft of the local content policy, which is yet to be approved by government.

    This is to address the effects of market failure through initiatives that indigenizes the construction sector.

    It is expected that the institution of a local content policy for the sector will foster the mushrooming of thriving indigenous firms with strong footing locally that are able to eventually compete globally.

    Dating back to the post World War II, most of Ghana’s construction sector was largely dominated by Italian contractors who were mainly Master craftsmen hired by the then Gold Coast administration to build the infrastructure base of the then British Colony.

    However, through unintended skills transfer processes, some local people acquired these skill sets and subsequently set up their own businesses.

    Subjective evidence has it that the period leading to 1957 saw an influx of foreign construction firms that carried out almost all government projects, ranging from residential buildings to critical economic infrastructure works. The maintenance of same and other existing assets and facilities was, however, entrusted with the Public Works Department (PWD).

    Subsequent economic reforms and the structural adjustment programmes that followed, coupled with trade liberalization policies pursued at the time, opened the country’s doors to the foreign world. The effects were mixed, in that; it provided the needed capital injections that were so badly needed to build the nation’s infrastructure that was at the brink of collapse.

    On the hand, the down side of this policy and its effect on the construction industry were the conditionalities that came with such support and the subtly protectionist strategies many of these countries pursued, which required that expatriates executed the jobs.

    The lack of skill transfer strategy meant that only a few Ghanaians, who had the capacity and desire, benefited from the skills flow that should necessarily have accompanied this approach to contract execution.

    Although, a few locally owned construction firms have been successful locally, and even gone international over the years; the construction industry has operated below its potential overall.

    By Joshua W. Amlanu

     

     

     

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