The construction industry is a sector of the economy that transforms various resources into constructed physical economic and social infrastructure necessary for socio-economic development. It embraces the process by which the said physical infrastructure are planned, designed, procured, constructed or produced, altered, repaired, maintained and demolished. The constructed infrastructure include:
The industry comprises of organizations and persons who include companies, firms and individuals working as consultants, main contractors and sub-contractors, material and component producers, plant and equipment suppliers, builders and merchants. The industry has a close relationship with clients and financiers. The government is involved in the industry as purchaser (client), financier, regulator and operator.
In developed countries and countries with economies in transition, other than the least developed countries, their local construction industries have the lions share in market opportunities.
- Transportation systems and facilities which are airports, harbors, highways, bridges, railroads, transit systems, pipelines and transmission and power lines
- Structures for fluid containment, control and distribution such as water treatment and distribution, sewage collection and treatment distribution systems, sedimentation lagoons, dams, and irrigation and canal systems.
- Underground structures, such as tunnels and mines
However, for least developed countries, the construction industries are dominated by Foreign Service providers to the tune of at least 65% in terms of money value of market share. For example, in the Southern Africa Development Community (SADC) region, and with the exception of South Africa, local contractors and consultants have approximately 30% market share in the region; Malawi (23%), Swaziland (35%), Tanzania (20%), South Africa (85%).
In Tanzania foreign contractors and consultants account for about 80% of the market share.
Since the construction industry is a fundamental economic activity which permeates most of the sectors of the economy it has a major role to play in achieving social economic development objectives of any country; local firms and professionals should be fully involved in the process. The sector has indirect impact on the growth or stagnation of the overall economy. Furthermore, the development of a strong construction industry should be supported by sectoral and macro-economic policies geared towards stimulating growth and competitive position of the local actors.
Importance of the Construction Industry
The Construction Industry plays a significant role in Tanzania’s economic growth. The average growth rate for the Construction Sector increased from 1.3% in 1994 to 12.0% in 1998. The contribution of the construction sector in employment creation accounted for 8.9.%. The informal sector participation is extremely significant since it provides housing and other infrastructure facilities to the 80% of the population which lives in the rural areas. Between 1999 and 2000 the growth of the construction sector averaged 8.5% while its contribution to GDP averaged 4.6%. The average contribution to total capital formation during the period 1988 to 1997 was 57%. In terms of government expenditure, an average of 14% of the development budget was spent on construction projects for the period 1988 to1997 compared to an average of 30% for the period 1976 to 1985
Economic Development Vision
Tanzania has now embarked on a long-term development Vision 2025 whose overall goal is to attain sustainable human development with all pre-requisites for a middle income country by the year 2025. This envisages creation of a strong, diversified, resilient and competitive economy that can effectively cope with the challenges of development and that can easily adapt to the changing market and technological conditions in the regional and global economy. The priorities identified as the essential catalyst for the attainment of the Vision 2025 objective include development of infrastructure as an important ingredient towards attainment of faster economic growth.
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