eBusiness Weekly
Enacy Mapakame
HARARE – Local contractors have put on hold implementation of projects in the country due to foreign currency shortages coupled with effects of the multi-tier pricing which is causing disparities, industry body said.
Construction Industry Federation of Zimbabwe (CIFOZ) president Harold Chinogurei said effects of the multi-tier pricing were beginning to sink and hindering them from meeting obligations.
The challenge was compounded by the unilateral price hikes experienced in October when exchange rates on the parallel market hit as high as 400 percent.
For contractors, accessing foreign currency for procurement of plant equipment has been a challenge while at the same time receiving payment in Real Time Gross Settlement (RTGS) creating a disparity that threatened operations.
“It has come to our attention as an organisation that most of our members have suspended implementation of most of their projects due to the RTGS pricing that is pegged against the USD
“Contractors are finding it difficult to produce, to procure material and plant equipment which is charged in US dollars while they are paid in RTGS,” said Mr Chinogurei at a Procurement Regulatory Authority of Zimbabwe (PRAZ) indaba in the capital.
“It is therefore crucial for the Reserve Bank of Zimbabwe (RBZ) to allocate foreign currency to the industry to procure material, plants and maintain the same equipment,” he said.
CIFOZ is the representative body for construction industry, suppliers of building materials and other consumables.
Like any other sector, construction industry is battling economic challenges, key among them shortages in foreign currency.
Apart from foreign currency shortages, the industry is also affected by delays in payments despite completion of projects.
Mr Chinogurei said, this was hindering the sector from meeting its objectives of meaningfully contributing to economic turnaround and pushing the country’s agenda of becoming an upper middle income economy as espoused in Vision 2030.
The construction is core to the development of the economy through implementation of infrastructure projects.
Infrastructure has also been identified as an enabler to economic growth.
Mr Chinogurei however said, the local construction industry was missing out on major Government projects that were being tendered to foreign firms.
Involvement of local firms right from planning stages would ensure technology and skills transfer to locals as well and create employment.
“Local contractors are ready to help Government carry out projects, we have the capacity and this has numerous benefits to the economy and ensures we achieve value for money,” said Mr Chinogurei adding Government needed to expedite the passing of the Contractors Bill into law. This will regulate the industry and flush out fly by night players
