Increasing operational costs threaten construction sector in Uganda
Real Estates and individual property developers have continued to suffer from increased operational costs even as the economy continues to experience some relief from the tumultuous economic situations that characterised much of 2011.
Prices of construction materials continue to soar even as economic volatilities ease. File Photo
As employees continue to demand for higher wages in order to meet their daily needs, the cost of construction materials including cement, iron sheets, nails, paint and glass have continued to rise. This has led to higher operational costs on the side of the developers.
A survey conducted by Daily Monitor yesterday showed that a bag of cement went for at least Shs32,000 compared to Shs30,000 last month.
Other materials were equally expensive. Iron sheets were priced at between Shs23,000 and 33,000 each depending on the gauge.
Price varieties
Different nail sizes went for between Shs6,000 and Shs8,000 per kilogramme, a four litre jerrycan of paint goes for Shs7,000 while a 20 – litre jerrycan of paint goes for Shs30,000. These prices reflected an average increase of more than Shs1,000 for each material.
In a telephone interview, Mr Tonny Miiro, the managing director of Uptime solutions attributed the increasing prices to routine shut down of one of the cement plants and also importation pressures.
“Of late, prices have continued to go up. For cement, it is the routine shut down of one of the main plants for maintenance reasons that has led to shortages and hence high prices. Other material prices have gone up because of consequences of high importation costs. ”
According to Mr Vincent Sekyanzi, the managing director of Afri properties, soaring prices of construction materials are leaving the sector less profitable, a factor that may affect its growth.
“As constructors, we continue to have reduced profit margins and at times incurring losses due to the increasing prices,” he said.
Eng Abraham Byandala, the minister of Works acknowledged the growing concerns about the rising prices but insisted that it was only the country’s financial controllers that can save the situation and not his ministry.
“Yes, we realise that the prices of construction materials are going up. When issuing out contracts, we get this information and also do private assessments to know what is happening in the markets. The high prices are as a result of both internal economic problems and international factors.”
He added: “Unfortunately, as the ministry in charge, we cannot do much about these prices.”
By the end of 2011, construction sector was one of the fastest growing sectors in Uganda, employing thousands at wage payment structure and also consuming several tonnes of local raw materials. It grew by 13 percent in 2011 and also contributed 12 percent to the country’s GDP.
But with the current state of affairs, this sector may need government’s intervention if it is to regain its steady growth trends.
By Nicholas Kalungi, Daily Monitor
