An ambitious drive by Government to spearhead job creation and stimulate economy development through infrastructure development is paying after N$166m worth of construction work was completed in the first quarter of this year.
Most of the construction work was done in both public and private sector with housing construction steering much of the private investments in the sector according to the latest Business Climate Index released by Institute for Public Policy Research-IPPR last week.
While IPPR shows that most of the money exchanged hands in the construction sector in the first quarter of the year, it also noted that local exporters in the fishing, mining and horticulture industries did not benefit much from the 1.2% slump of the local currency on the world market in the past months due to subdued production.
“This comes amid an increase in the number of people purchasing luxurious vehicles through mortgages and bank loans as financial institutions increase the rate of issuing out such incentives to both individuals and corporates,” IPPR noted.
In normal cases, exporters reap high rewards on the global market whenever the local currency weakens on the international market since they earn more on the exchange rate in the local market.
The Business Climate Index also shows that although construction of both public and private buildings including houses has not been convincing, the sector has potential to create short term employment if enough investments are made.
“The business index shed off 7.4 index points in May on the back of rather disappointing construction figures. A mere N$63m worth of construction work was completed during the month and a further N$166m worth of construction work was approved.
“With both figures down 50% from the same period last year, further analysis indicates there was a slowdown in the construction of commercial properties,” IPPR noted.
While construction took a knock but still pulled through, the country did not receive enough investments across all sectors in the period leading to end of May with the investment index shedding 11.3 points in the period under review.
In fact, IPPR noted that much of the investments were made in the smaller sectors like retail industry where a few locals have been making in-roads into fashion boutiques while interest in the transport sector remains the hive of most business people because of high returns
“The lower appetite for investment put downward pressure on the leading indicator, which shed 8.5 index points and therefore suggests weaker business sentiments six months down the line.
“This was due to copper prices falling 6.5%, zinc prices falling 1.5% and uranium prices falling 4.1%. The weaker local currency merely cushioned the fall in prices and at the end of the day metal exporters received less money for their exports,” noted IPPR.
According to the index, fish prices moved moderately while beef prices fell by 1% due to softer seasonal demand while mutton prices increased by 2%.
“Consumer confidence was buoyant for the third consecutive month as the consumption index rose by 1 index point. Consumers continued to splurge on new vehicles, with passenger vehicle sales up 1%t from the previous month and 13% year on year,” noted IPPR.