The construction sector has admitted that most life changing and landmark projects in Malawi have fallen to the effect of the devaluation, a situation they are tagging to calls for prudent financial measures.
The concern was highlighted during a high-level webinar Real Estate Talk Mw hosted the Webinar on behalf if The Board of Architects and Quantity surveyors as themed: ‘’ Rethinking Construction Amidst Economic Crises: The Case of Currency Devaluation in Malawi.
In his presentation, Engineer Dr. Peter Matipwiri, Chief Executive Officer for PMB Construction noted that the 44 percent devolution led into a rise in prices of imports, lower quantity of imports as a result of among other things Aggregate Demand rises.
‘’ So, what we are saying here is that in a predominantly importing economy a surge rise in cost prices is experienced. This is leading to either decreased or delayed production over time. The situation has been compounded by an evident unavailability of some essential foreign goods,’’ he said.
For the construction sector Dr Matipwiri stated that the situation has increased demand of domestic construction products that may be of lower quality and also a delay in construction process as local currencies can only chase fewer imported goods.
Outside, the confines of the physical work, he says there have also been issues forcing companies to compromise in their expected roles.
For example, he says that there has been increased contract conflicts and arbitrations between clients and contractors.
‘’Further, there are cases of increased nonperformance or litigation records that disadvantages the contractor and also increased time extensions and related penalties-bond cashing which is translating into unfortunate cases of increased abandoned projects,’’ noted Dr Matipwiri.
On his part, QS Martin Chimangeni who gave the perspective of the public sector admitted that the situation is worse and that there has been increased costs of construction beyond the anticipated and budgeted amounts affect the desired returns and value of a project.
He however said as a matter of continued remedy, the Government is still recruiting professionals in the field of construction to ensure there are more bodies for the management of the projects.
‘’ The government has varied some clauses in fixed contracts to accommodate the changes in the market. The process is monitored and approved through established procurement processes. The government has engaged the National Construction Industry Council (NCIC) on the usage of construction cost indices,’’ said Chimangeni.
Other presenters in the webinar were Architect Dorothy Nyong’onya who focused on Currency Devaluation and Construction Contracts: Regulators’ perspective as well as QS Kennedy Mvula.
The webinar had players for the construction, surveyor, academic and media sectors.