LITERATURE REVIEW
3.4.0 The Construction industry in Sub-5aharan Africa and its Role in National Development
Before discussing the relationship between the Enabling Shelter Development Strategy and the construction in great detail, a brief profile of the structure and the role of the construction industry in national development in Sub-Saharan Africa is explored here. Studies by various researchers have shown that there is a strong relationship between shelter and the construction industry on one hand and the level of national development on the other [Edmonds and Miles, (1984);
Rodwin (1987); Meen, (1995)]. Edmonds and Miles (1984) and UNCHS (1996) have further argued that the importance of the construction industry in any
country is not only in terms of the products it produces, but also in the amount of public investment (50-80%) it consumes; its high share of Gross Fixed Capital Formation (over 50%) and the percentage of employment in the industry.
Klaassen et al(1987) and Spenceet al(1993) have argued that investment in housing is a major catalyst in stimulating the construction industry and ensuring sustained long-term development. Their argument is that, increased housing spending leads to increased building of housing, consequently creating more job opportunities within and outside the direct construction industry. They go on to argue that increased housing spending increases aggregate savings and hence reduces disposable income leading to reduced inflation.
Edmonds and Miles (1984) also found that, the Value Added by the Construction industry (VAC) varies from country to country depending on Gross National Product (GNP). They found that the percentage value added in construction is on average higher for countries with a higher GNP/ capital than those with a lower GNP/capital. Table 3.2 also shows that Value Added as a percentage of Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF) per capita, investment workplace and employment per 1,000 population all increase in a country's Gross National Product. This explains the low percentage
contribution of the construction industry to the national economy in Sub-Saharan Africa (Zimbabwe included) as compared to the percentage contribution in developed countries.
Table 3.2 Characteristics of the construction industry
Investmen
GNP per Type Number VAC VAC as GFCF per t per Employme
Capital of per % of workplace workplace nt per 1,000
(US $) countries capital GDP (US$) (US$)
(US $)
<500 A 30 13 4.66 19.5 6.518 3.6
500-999 B 23 44 5.62 99.7 10.974 9.1
1000-1999 C 22 87 6.08 187.9 15.437 15.3
2000-3999 0
---_. eo _ _ • _ _ _ _ _
. . -. - - - -.--.~-_.- .--_._-----._-- - ' - . _ - - - -
15 239 7.49 490.6 23.571 25.2
4000-8999 E 14 466 7.36 861.2 33.787 25.4
>9000 F 12 919 7.80 1,672.1 57,489 26.9
Source: Edmonds and Miles, 1984, p7
The structure of the construction industry in Sub-Saharan Africa is very varied and tends to vary from country to country. In general terms however, the industry can be divided into formal and informal sectors.
(a). Informal sector: Comprises mostly of small sized and family construction companies working with both the formal and mostly informal sector. As was the case in Zimbabwe (see chapter one), the informal sector had advantages over the formal construction sector. For example, Korboe (1993) showed how the informal construction sector in Ghana was able to build a "bedsitter" at one-sixth the cost of building the same unit by the formal construction sector. In economic terms however, relationships in the construction market are dassified under (i) Demand and (ii) Supply
(b) Formal sector: Comprising mostly of large international and local public and private construction companies working on large projects. Like the formal construction sector in Zimbabwe which is developed on the model of its former colonial master: Britain, the same can be said for most other countries in Sub- Saharan Africa. The formal construction sector tends to cover projects in all areas of the construction i.e. industrial plant, buildings (induding housing), roads and general infrastructure. Because of the huge investment needed to buy plant and machinery, especially for civil engineering projects, most firms in this sub- sector tended to be public sector or private limited firms. Grimes (1976) has however, argued that the tendency to use capital-intensive techniques was largely because of the overvalued exchange rates, subsidized interest rates and other distortions in these economies.
3.4.1 Construction Demand
Generally in any country, (Zimbabwe included) the demand for construction goods and services can be grouped into two main classes:
1. Building works: This sector groups all construction works involved in the building of houses, offices, schools, dinics, hospitals, factories, and so on. This is where the private sector investment has traditionally
invested.
2. Civil engineering works: of which infrastructure (provision and repairs) is the main component i.e. road works, water and electricity reticulation, sewerage and so on. It is not surprising therefore, that civil engineering works have traditionally been undertaken by the public sector.
But with the promotion of the private sector in the provision of public services, under the Economic Structural Adjustment Programme, this has resulted in the entry of the private sector into this area.
Reduced public sector budget for capital programmes resulting from the debt crisis and the application of Economic Structural Adjustment policies in most Sub-Saharan countries has resulted in drastic reduction in construction demand.
Private institutions and individuals have also tended to cut back on their spending on construction goods and services because incomes have equally fallen,
(UNCHS1985 and1996). The thesis traces whether this scenario is "totally" true for Zimbabwe.