By FARIDAH KULABAKO
A slowdown of activity in the construction
sector, coupled with competition has resulted in
a fall in prices of construction materials.
a fall in prices of construction materials.
The latest Uganda Bureau of Statistics
Construction Sector Indices indicate that prices for cement, lime,
diesel, iron sheets and other metal products dropped in the third
quarter spanning June to September 2013 due to a contraction in demand
and high competition between local imported products.
Property Developers Association president Anatoli
Kamugisha attributed the slowdown in construction activities to low
purchasing power among people who would be undertaking construction
projects due to a shortage of money in circulation.
“Government is yet to pay most contractors and
suppliers; so there is little money in circulation, people don’t have
money to invest in new projects,” Mr Kamugisha who is also the managing
director of Akright Projects told Prosper in an interview last week.
Due to reduced activity in the sector, Mr
Kamugisha said manufacturers of construction sector inputs have been
forced to charge relatively lower prices to keep afloat in the market.
The chief executive officer of the Association of
Real Estate Agents in Uganda, Mr Vincent Agaba, also recently said that
growth in the sector had stagnated due to a low basket of property
buyers, attributed to shocks that affected the industry in the past
including high inflation rates and the closure of the land registry to
enable the Ministry of Lands to complete the automation exercise among
others.
Meaning
The low cost of construction inputs means that people undertaking construction projects currently or in the last quarter paid less compared to the same period last year.
The low cost of construction inputs means that people undertaking construction projects currently or in the last quarter paid less compared to the same period last year.
For instance, a bag of cement now costs Shs26,000, down from the Shs30,000 it cost between July and September last year.
Iron sheets, however, range from Shs26,000 to Shs55,000 depending on the gauge, make, colour and manufacturer, down from between Shs28,000 and Shs60,000 a year ago.
Iron sheets, however, range from Shs26,000 to Shs55,000 depending on the gauge, make, colour and manufacturer, down from between Shs28,000 and Shs60,000 a year ago.
The fall in prices of prices of iron steel
products including iron sheets was a result of competition in the iron
and steel sector due to a fall in world steel prices, according to Mr
William Anguyo, the principal statistician in charge of business and
industry statistics at Ubos.
Cement production in the country has increased
following the entry of new players such as Moroto Cement whose
production capacity is estimated at 3,000 metric tonnes daily as well as
an increase in production capacities of Hima and Tororo Cement
factories, among others.
Cement supply in the country is currently
estimated at 137,000 toness, up from 115,000 tonnes in 2012, according
to Ubos. As cement production increases, prices are also expected to
continue trending downwards.
The slowdown in construction sector activity and
the fall in sector input prices saw inflation in the sector decline by
8.7 per cent in the third quarter this year compared to a similar
quarter in 2012.
A stable local Shilling that made importation of
raw materials used in manufacturing steel products also facilitated a
fall in product prices.
Despite a fall in cement, lime, diesel and steel
prices, charges for other construction materials including timber, PVC
pipes, aggregates, equipment hire, concrete, tiles and burnt clay bricks
remained fairly unchanged due to relatively stable market conditions,
according to Mr John Bonaventure Musoke, senior statistician, Ubos.
The sector may, however, experience lower growth rates this year due to contraction in activities.
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