Experts in the construction sector have raised alarms about the Ethiopian government’s increasing control over the industry, warning that it could lead to the bankruptcy of an already struggling sector. As private companies continue to secure contracts, concerns have been voiced regarding their ability to deliver satisfactory results.
A recent consultation forum, themed “Construction Breakthroughs for Nation-Building,” brought together key stakeholders to discuss the current state of the construction industry, its challenges, and future directions. One of the primary concerns highlighted during the discussions was the need for the government to step back and allow the private sector to thrive.
Participants at the forum expressed frustration over government practices that they believe hinder private sector growth. Critics pointed out that government entities often develop their own designs and award contracts to foreign companies, which can exceed local capabilities. Smaller projects are frequently allocated to associations rather than local contractors.
Girma Habtemariam, Vice President of the Construction Constructors Association, noted that while foreign contractors typically enter markets to undertake large-scale projects requiring advanced technology, their presence in Ethiopia has raised concerns. “Foreign contractors used to bid for projects worth more than 600 million birr, but now they can bid on projects over 3 million birr, while smaller projects are still not approved for local contractors,” he explained.
The government has established regulations aimed at ensuring that foreign contractors fill gaps in areas beyond local capabilities. However, Girma emphasized that this approach has created market challenges for local contractors, who are struggling against unhealthy competition and regulatory obstacles.
Yetemgeta Asrat, State Minister of Ministry of Urban and Infrastructure, reassured attendees that the government is focused on transitioning from foreign contractors to domestic ones. He acknowledged the need for significant improvements in local capacity to handle infrastructure and high-end construction projects.
Despite three decades of growth in the construction sector, Ethiopia remains heavily reliant on foreign contractors for major infrastructure developments. Experts have cited budget deficits, reliance on imported materials, supply chain issues, and foreign exchange challenges as significant barriers preventing domestic companies from achieving productivity.
The forum revealed alarming statistics regarding project completion times. Construction projects are reportedly completed 143% later than scheduled, while road construction projects face delays of 110%. These delays have resulted in a 35% increase in overall project budgets.Experts highlighted several bottlenecks contributing to these issues, including inadequate project completion rates, quality standards concerns, security issues, capacity gaps among contractors, and financing shortages.
