ECA Price Watch names construction sector as key driver of growth

Economic news for Thursday 25 February 2021

Source: GNA

02/25/2021

Bartholomew Armah, director of macroeconomics and governance at the Economic Commission for Africa (ECA), said that a vibrant building ecosystem is an indispensable engine of growth in a country.

“Construction is a key lever for infrastructure development and plays a crucial role in an economy, providing essential structures, including public and private infrastructure, and housing.”

He was speaking at a ministerial webinar organized to introduce African member states to the latest in a series of quarterly briefings to finance ministers by the ‘ECA Price Monitoring Center for Africa’ ‘, focused on “ price trends in the construction sector’ ‘.

Mr. Armah cited Ethiopia, Angola and Tanzania as the top countries where construction made a significant contribution to GDP in 2019.

He noted, however, that the sector had been severely affected by COVID-19, resulting in a 45% loss of economic activity in 2020.

The Director of the African Center for Statistics, ECA, Oliver Chinganya, said: “Construction prices have increased in many countries, threatening the affordability of decent housing and placing a heavy burden on infrastructure development. . This is triggered, in large part, by foreclosure measures instituted by governments. “

According to the report, the average price increase in most African countries is more than 3% per year. This could be attributed to several factors including the exchange rate, high import taxes and prices in other sectors.

Mr. Chinganya noted that with the halt of construction projects due to COVID-19, construction workers have become unemployed, adding to the current burden of unemployment and poverty in many countries.

The report noted that construction was increasing more (over 5% per year) in the fastest growing economies such as Ethiopia, Mali, Djibouti, Rwanda, Côte d’Ivoire, Tanzania, Senegal and Togo.

More moderate growth countries such as Niger, Benin, Kenya, Uganda, Gambia, Guinea-Bissau, Egypt, Cabo Verde, DRC, Cameroon and Madagascar also recorded strong growth 3 to 5% annually in the construction sector.

The study recommended that countries prioritize investments in the construction sector, given its potential to significantly boost economic growth without necessarily equating to inflation.

Countries are also urged to develop environmentally friendly methods and infrastructure materials while prioritizing the use of local materials and green building practices.

The ECA Price Monitoring Center for Africa is a reference on the latest price developments on the continent, providing African policymakers with a unique view of the most recent price developments in the country, sub-regional and at the level. continent, in support of medium-term economic governance and long-term sustainable development planning.

The next Price Watch discussion will focus on energy pricing. ECA is engaged in activities aimed at strengthening its collaboration with national statistical offices and research institutes to improve data collection and analysis.