Delicate Number | Oct 23,2021
The Ethiopian Statistics Service (ESS) plans to launch a price index survey focusing on construction materials and inputs.
The index is anticipated to serve as a crucial marker in a government-mandated price escalation adjustment for projects commissioned by public offices and universities. Over 800 ongoing projects worth nearly 100 billion Br are publically financed, with almost 90pc run by 41 federal universities.
Officials of the Service, formerly the Central Statistics Agency, have been working on the project since last month, with the plan to use a probability sampling method among others to determine the average prices of up to 30,000 materials used for construction. Over 100 data collectors will be deployed next month to compile prices in a pilot project. They expect the process to take no longer than one month.
The Service plans to compile indices quarterly and use the first survey as a benchmark for future reference, says Zelalem Hailegiorgis, head of the business statistics directorate at the ESS.
The construction industry grew at an annual rate of 11pc for over a decade before taking a series of hits in the past couple of years. The tumble began with the doubling of cement prices to 500 Br a quintal in 2019. Similar increases in the prices of other inputs, such as reinforcement bars (rebar) and aluminium, followed. Finishing materials have also seen prices skyrocket.
Health protocols in response to the COVID-19 pandemic forced some contractors to suspend or even terminate projects, and the construction industry has been struggling to recover ever since.
Outcries from contractors led the Ministry of Finance to issue a circular in March this year, directing federal government offices and public universities to adjust the contractual value of projects based on the changes in the price of construction inputs. In August, following another circular from the Ministry directing that finishing materials should be included in the escalation list, a committee was formed to conduct a market study. It comprises members from the Urban Development and Finance ministries, the Public Procurement & Property Administration Agency, and the Ethiopian Contractors Association.
However, there has been little progress to speak of.
The Contractors Association, representing around 2,500 construction firms, has been collecting receipts and data from 2017 onward to determine trends and the current market prices of inputs such as cement, steel, rebar and finishing materials. The President of the Association, Girma Habtemariam, believes the survey will be of great help in reaching a fair arrangement.
"A separate index for the construction industry will make the price escalation adjustment workable," said Girma.
It is a sentiment shared by Addis Midiksa, a founder and general manager of AK Construction, a grade-four contractor that has been in the industry for almost a decade. According to Addis, it will be instrumental in ensuring transparency and raising the credibility of contractors who will use the index whenever making requests.
Abebe Demisew, head of the Construction Technology & Management Academic Programme at Debre Markos Institute of Technology, urges the surveyors to analyse price patterns across the supply chain.
"There is a tendency to focus on retail price," Abebe told Fortune. "As much attention should be given to factory and wholesale prices."
PUBLISHED ON Oct 16,2021 [ VOL 22 , NO 1120]
Agenda | May 21,2022
Fortune News | Apr 16,2022
Sponsored Contents | Aug 16,2021
Fortune News | Sep 26,2021
Fortune News | Dec 19,2021
Dec 24 , 2022
Biniam Mikru heads the department of cabinet affairs under Mayor Adanech Abiebie. But...
Jul 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
Nov 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
Nov 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
In an enlightening tour organised by Ethiopia's Tulu Kapi Gold Mines S.C., a coterie...
Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...
When the country's most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or two...
Sep 16 , 2023
The Ethiopian economic narrative oscillates between pockets of resilience and signifi...
Sep 10 , 2023
Earlier this Ethiopian fiscal year, the heralding of a peace deal became synonymous w...
Sep 2 , 2023
An unfolding horror story revealed the human cost of desperate migration in the arid...
Aug 26 , 2023
In the rain-drenched streets of Addis Abeba, there was a distinct ripple of optimism...
The dilemma between modern and traditional treatment has sparked an ongoing debate for many years. Recent...
Or see contact page