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Published on June 21st, 2016 | by admin

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POURING COLD WATER ON A ONCE RED-HOT SEcTOR

Bleak prospects apparently face the construction sector as the critical water situation in the central parts of the country starts to bite. For the longest time it seemed as if the good times would just keep rolling on and on and on. And it would have too if of late it had not been for that one quite significant input factor. This natural resource, or more accurately, the prohibitive shortage thereof, appears now to be putting the breaks to a sector that has been a mainstay of the Namibian economy for a while now.  Since about shortly after the turn of the century the Namibian construction sector has been one of the growth engines of the economy, at times outpacing all other sectors in quarter-onquarter growth.   The escalating double digit growth over especially the last decade was due to increased state infrastructure spending, an explosion in private residential construction and improvement, an acute shortage of affordable housing options available to a growing middle-class, buoyant consumer credit conditions, growing speculation on the urban property market on the back of burgeoning demand that has been red-hot across all housing and property types and classes particularly over the last five years or so.

The Claim

The catastrophic water shortage looming to cripple the economy of the central parts of the country will hit the construction sector really hard with the Construction Industries Federation (CIF), the largest sectoral representative umbrella body, estimating that about 40,000 jobs could be lost as a consequence of activities in the sector having to be scaled back drastically over coming months and years. The CIF has a membership base of 465 construction firms and associated industry companies (such as hardware wholesalers, plumbing and electrical concerns, etc.) affiliated to it. It should be stressed that not all construction firms are members of the CIF. According to reports, the cascading effects of massive job losses in the sector could see as many as 400,000 or almost a fifth of the country’s population impacted. The seriousness of the situation is captured in this estimate of 10 people negatively affected for every one livelihood lost. It is unclear how the CIF came to this estimate. That said, it should be clear that the reliability of these figures cannot be vouched for and they might be wildly overblown estimates of job losses across various sectors affiliated to the construction industry. Even so, the figures do come across as approximate to the a reasonable assessment in this case.

Analysis

Potential job losses in the region of 40,000 would mean that well over two-thirds of the jobs in the sector are in danger at the moment, if we’re strictly talking about construction jobs and do not include related industry jobs, such as those in construction inputs wholesale and retail and others. The 2014 Namibia Labour Force Survey (NLFS), of the Namibia Statistics Agency (NSA), put jobs in the sector at 56,747. This figure excludes those in the affiliated industries. According to the 2014 NLFS the total number of employed in the country is 712,752, which would mean that 40,000 jobs lost would account for roughly six percent of total jobs disappearing. This is a significant loss accounted for by only one sector. A policy brief submitted to the Office of the President earlier this year estimates construction’s contribution to overall employment in 2016 at 11.2 percent. This represents an almost doubling of the sector’s contribution to total employment over the five-year period since 2012, when the sector’s overall employment contribution stood at 6.8 percent. The loss of more than two-thirds of the jobs in the sector could thus take the sector’s contribution to total employment back down to the 2012 level.

Assessment The cited figures do seem to hold water and so the claim gets a pass.


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