EDPRS: Construction and the poverty reduction strategies

BY GODFREY NTAGUNGIRA Rwanda’s building and construction industry today is rapidly growing and has seen a boom in the past couple of years as it is being transformed from being state funded to private funding. More private real estate developers have come on board to develop housing estates on a commercial basis. Rwanda adopted the National Construction Industry Policy (NCI) which is oriented towards Rwanda’s programmes and strategies that have been developed. These include the Vision2020, the Economic Development and Poverty Reduction Strategy (EDPRS), the National Investments Strategy (NIS), and the objectives of the Millennium Development Goals (MDG’s). The NCI Policy also takes into account cross-cutting issues such as HIV/AIDS, gender mainstreaming and socio-economic and environmental issues. The ultimate goal of a developed NCI is that by the year 2020 dependent upon the existence of strong leadership and motivated staff in business development bodies, regulatory boards, and professional associations; upon the commitment of government ministries to employ local contractors and consultants; and also upon positive assistance from all support organisations. NCI policy is based on the strategic framework of Vision 2020, and is aimed at promoting investment and the management of physical infrastructure for sustainable development. One strategic vision of the programme is to develop into a middle income country by the year 2020. To get a glimpse into the importance of this sector to the economy of Rwanda, its growth potential and hence its ability to generate favourable rates of returns to investors here are some facts: between the years 2003 to 2008, the construction sector grew by 351% from an average annual output of US$100 million in 2003 to an estimated US$351 million. The estimate operating budget for the first three years of the adoption of this policy shall total approximately US$1,500,000.00, based on a 1:3 contribution by the government and development partners. National Investment Strategy (NIS) Under the national investment strategy which was adopted by the Rwandan government in 2002, emphasis is placed on the promotion of the private sector in the development of the construction industry. Under the NIS the government aims at gradually increasing capital expenditure in the development of infrastructure, this is directly proportional to the growth of the construction industry. The NCI policy is oriented towards achieving the above goals by creating a favourable environment for infrastructure development thereby creating access to basic infrastructure, employment creation and commerce enhancement. The construction sector has had phenomenal growth in Rwanda. It has been responsible for the continued growth in GDP over the past 10 years. There is no sector of the Rwandan economy that shows more promise than this sector and associated industries. The construction sector in Rwanda boasts a number of international investors and considerable amounts of foreign direct investment (FDI). There are projects in the pipeline that are expected to dramatically increase demand for construction, construction related inputs and construction services. These include the Kigali convention centre, the building of 5477 low to medium income housing, as well as construction of hotels and other structures resulting from the growth in other sectors such as tourism and telecommunications. One major challenge is the shortage of skilled local engineers and construction workers, especially artisans in vocational fields such as masons, bricklayers, metal workers and others. Maintaining and upgrading of existing infrastructure is another challenge as this has to be balanced with the construction of new infrastructure to accommodate Rwanda’s growth. The key stakeholders in the national construction industry are the Government, donors, private investors, consultants and contractors. Professional Bodies Although not yet fully developed, the formation of professional bodies (or learned societies) is anticipated to be supported by its members to take a more global view of the industry, with the aim of advancing knowledge and dissemination of information within the industry. They typically admit approved engineers, architects, surveyors. Professional bodies aim to maintain standards, ethics and a high level of professional competence amongst their membership. The development of the construction industry is in line with government policy of local capacity building. In order to ensure sustainability in service delivery, the government will continue to strengthen and facilitate local contractors and consultants until they are able to perform work currently being executed by multinational firms. However, previous research studies and seminars aimed at promoting NCI growth. Registration of Contractors The register of contractors shall be updated annually by the NCCR. The classification of the registered contractors shall be according to their working methods, such as labour or equipment based, and their ability to undertake or supply predetermined sizes and types of goods and services. The registration and classification of contractors shall be developed into a Statute by the third year after the implementation of the policy. Support to Regulatory and Professional Bodies Within the first three years after the implementation of this policy, the government shall undertake the following actions: a) Fill the position of Registrar in each of the regulatory bodies with substantive appointments of Commissioner level officers; b) Provide all necessary equipment and logistics to the office of each Registrar to enable the effective discharge of office functions; c) Support measures proposed by the regulatory bodies or by other stakeholders to strengthen them and enable the effective implementation of their responsibilities; and d) Participate in the activities of the various learned societies, which aim at supporting this Policy or any other policies, programmes and statutes for the improved operations of the National Construction Industry. Application of Labour-Based Technology In order to reduce over-dependency on expensive construction equipment and to contribute to poverty alleviation by boosting household incomes, the value of programmed works executed using labour-based methods shall gradually increase to reach minimum established targets. In order to achieve these targets, the following actions shall be undertaken: a) The Labour-Based Works Training Centre in TVET and the Rwanda developed work force shall be strengthened and facilitated to conduct courses on labour-based technology so that the above minimum values of work executed in various sectors by labour are achieved; b) Compile and disseminate comprehensive labour-based design standards and implementation guidelines; c) Determine specific labour-based technologies and methods of rehabilitation and maintenance in contract documents; d) Design and implement programmes to sensitise stakeholders in the use of labour-based technologies; e) Encourage, support and develop small scale contractors to implement labour-based road works; f) Build the capacity of officials, consultants and contractors in the use of labour-based technology. Development of Consultants Government shall undertake the following actions within a five-year period following implementation of the NCI policy: a) Prepare the terms of reference for a study on “the capacity and constraints to the development of small-scale local consultants” to enable the strengthening and effective performing of its functions; b) Procure the consultancy services for, and the undertaking of the study; and c) Ensure that local consultants participate in the procurement process and in the implementation of all consultancy service contracts in the public sector, taking an increasingly lead role. Where international competitive bidding is a condition for the funding of a project, local consultants would be encouraged to participate in the bidding with foreign consultants in order to help develop local experience and capacity. SUPPORT FOR IMPLEMENTING THE ACTION PLAN Financing Plan The motive behind NCI is to establish a functioning construction industry support framework. The funding shall be based on a 25% government contribution and 75% shall be obtained from development partners. Universities and Technical Colleges Training of construction personnel at all levels, from engineers and construction managers to artisans, is one of the primary functions of the support framework. While all education and training institutions associated with the construction industry provide education and training in the engineering skills for design and construction techniques, there is need to formally incorporate into the curriculum the delivery of other skills such as communication; socio-economic issues; contract law; entrepreneurship; and business management. The National University of Rwanda and Kigali Institute of Science and Technology are well placed to undertake Research and Development to improve efficiency and productivity in the industry, given the necessary resources. Research and Development is a long-term goal which requires support from both the government and the industry itself. Development of Contractor Training Schemes A contractor training needs assessment shall be carried out and reviewed annually in order to develop an efficient training scheme in association with the appropriate institutions in the country. Training of Client Organisations Government support shall ensure that client agency staff receives necessary training in procurement and contract administration. A training needs review shall be conducted and training courses developed in association with training institutions. Improve the Registration and Classification Scheme The policy is aiming at improving the current MININFRA system of registration and classification of contractors, in order to differentiate between labour and equipment-based contractors, and also expand it to cover other areas of construction. This function shall eventually be transferred to the NCCR. Development of Small Consulting Firms Support shall be provided to the Rwanda association of consulting engineers to develop the mechanisms to assist small local consulting firms and streamline the engineering registration system. Implementation Strategy The implementation of all the outputs of the action plan shall be undertaken by NCCR under direction from MININFRA, and with collaboration from Ministries, development partners and the private sector. Support from training institutions; the registration boards for engineers, architects and surveyors respectively; and their corresponding professional bodies shall be sought by NCCR in the course of implementation. CONCLUSION The need to develop and support the National Construction Industry is a priority on the national development agenda. This NCI Policy shall form a significant contribution to the government’s efforts to address the need for sustainable development based on effective public-private sector partnership in the industry. The expected benefits and impacts of this Policy include: improved efficiency in planning and management by the National and Local Governments; easier access to finance and equipment by local businesses; increased access to projects; increased turnover by local contractors and consultants and at lower overheads than international companies, leading to better value for the money and greater retention of profits in the country; reduced project costs and increased savings accruing from increased local participation; and resulting multiplier effects on medium and long-term economic performance. Ends

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EDPRS: Construction and the poverty reduction strategies