On a broad plot across from a Sheger Bread stall in the heart of Qality, in the outskirts of Addis Abeba, lies the foundation of an unfinished 11-storey building. A group of seven friends came together two years ago with a plan to erect a structure on a 2,300sqm land. They had planned to get in on the action in the capital's lucrative property market.

The group hired Dynamic Construction Plc, a grade-three contractor incorporated two decades ago, to work on the foundation. The company, however, was adamant a clause is included in the contract stating it would be responsible only for providing labour and supervising the construction work. Its managers decided to leave the burden of buying construction materials and inputs to the project owners.

Dynamic Construction had good reason for doing so. Three years ago, the contractor landed a contract to build a 17-block vocational school in East Shewa, Oromia Regional State, for 40 million Br. The East Shewa administration eschewed any terms for price escalation agreements as the project completion time was less than a year. However, rising prices for construction materials meant Dynamic was left with a seven million Birr loss by the end of it all.

Kefelegn Hailu, a founder and general manager of Dynamic, had hoped to avoid a similar outcome when he insisted the contract with owners of the building project in Qality apply only to labour provision and supervision work.

“I'd immediately decided to engage only in construction works that do not involve material procurement,” said Kefelegn.

His company set to work on the foundation, laying reinforcement bars (rebar) immediately following the signing and securing a portion of the project cost as an advance. Unfortunately, it was not long before runaway prices impeded the project. In the weeks leading up to the launching of construction, a kilo of rebar was around 30 Br. It had nearly doubled by the time the project owners got around to buying rebar, leaving them short of cash to foot the bill for cement.

Dynamic Construction, which started with a registered capital of four million Birr, was forced to suspend construction with around two million Birr remaining in outstanding payments. The contractor now handles only one project; a twin 11-storey building in Qality where it was hired to provide labour and supervision for 70 million Br. Kefelegn laments the lack of provisions for price escalations in contracts. He is not alone.

Contractors across the industry have been in an uproar over the skyrocketing prices for building materials seen over the past few years. Combined with the COVID-19 pandemic and foreign currency crunch, jacked-up prices have pummeled the construction sector.

“It's never viable getting into contracts without proper consideration for price escalation,” said Kefelegn.

The construction industry, which contributes nearly a fifth of the country's gross domestic product (GDP), has been the primary driving force for the public investment-led development model the government has implemented over the last two decades. Growing by a yearly average of 11pc, the industry is a source of employment for five percent of the national workforce of over 41 million, according to the Ethiopian Statistical Service. However, the industry has been riddled with tribulations over the past couple of years.

Cement - or its unavailability - is among the primary pressure points. A crucial input in construction, prices nearly tripled to around 700 Br a quintal in the past three years. Despite the authorities' efforts to tame the surging prices and improve supply, including price caps, it did little to improve the situation. Intermediaries and brokers are blamed for capturing the supply chain, often accused of hoarding and price gouging.

Intermediaries are often reluctant to issue receipts, and retailers are afraid of inspectors from tax bureaus to sell cement without one.

"Trade in commodities like cement has become almost like contraband," said Kefelegn.

A walk through Megenagna, one of the capital's hubs for cement and rebar retail, demonstrates Kefelegn's observations. Stores are lined up alongside a wide tarmac road leading to the Ayat suburb, installed on elevated height accessible through a series of stairs. Not a few of them are seen sealed by local authorities accused of "sabotaging" the market. Retailers scrutinise would-be buyers with suspicion and question them with a degree of wariness.

Ironically, a few customers visited any of the over 50 stores dotting the warehouses lined up near the hyper-busy roundabout.

A few years ago, the story was markedly different. Clients, porters loading and unloading goods, trucks and drivers packed the street. They used to make it difficult for pedestrians to pass through. Vendors say things have cooled down due to a shortage of cement, and high prices scaring away potential buyers.

Alem Asfaw has been working at the rebar retail shop she inherited from a relative for nearly a decade. She recalled selling up to 300 pieces of rebar on a regular day. Those days are long gone. The last time she closed a sale - any sale - was a week ago, offering 20Kg of rebar for 110 Br a kilo. Alem blames shortages for the hard times.

“The factories are barely supplying us with the metal,” she told Fortune.

A few meters away from Alem's store, Senait Belete's had a range of building materials on offer. Near the entrance of her store was stacked up a few quintals of bagged cement. Only a handful of other stores in the bloc had any cement at all. A quintal of cement from the National Cement was sold for slightly less than 700 Br at her shop. It is 10pc higher than what she had been offering a week ago.

“I sold only a quintal of cement today,” she said.

Senait also had corrugated iron in stock, though prices for the material used mostly as roofing and fences have doubled to 500 Br apiece over the past four months. Frustrated by the drop in business, the vendors can do little but wait with folded arms. For better times.

This is a development that has left many notable contractors idle, while others are on the verge of collapse.

Among the latter are Tekleberhan Ambaye (TACON) and Afro-Tsion construction companies, whose reputations as top-tier contractors have all but faded over the past couple of years.

The Federal Building Construction Project Office, which currently handles seven mega projects across the country, scrapped a contract with TACON to construct a 16-storey building in Arat Kilo in November 2020. The 1.2 billion Br building slated to serve as a headquarters for the Ministry of Trade is only one of several that TACON has seen stripped from it. Others include an 11-storey building on the premises of the National Theater and two buildings to be erected for use by the Ministry of Foreign Affairs.