The Influx of Foreign Materials into the Ghanaian Construction Industry

Apr / 14 / 2022

The Ghanaianreal estate and construction industry is quickly expanding, and it is a substantial contribution to the country's GDP and employment generation. The Ghanaianreal estate and construction industry contributed more than 12.8 billion Ghanaian cedis (GHS), or about 2.1 billion US dollars, to the country's Gross Domestic Product in 2020.

The Ghanaianreal estate and construction industry have both added to and prospered from the country's strong economic growth over the last two decades. The government is investing in train, road, and property developments all around the country in response to growing demand from the urban service industry. It is on its way to becoming a developed economy with political stability, significant economic growth, and industrialization. However, if the infrastructure does not keep up with increased urbanization, slums may emerge.

A couple of years ago, few construction enterprises in Ghana could be seen. There were very few companies which provided supplies for construction. To name a few, Ghacem concrete, Osiadan Roofing tiles, and K Ofori iron rods were used. These were solely Ghanaian businesses that produced their goods in the country.

In recent years, there has been an influx of multinational corporations that have set up a business in Ghana and are gradually gaining market share. There's also been a rise in the adoption of foreign finished items in home construction. One challenging situation that occurs with multinationals is that when international construction corporations enter the country, they bring their own foreign materials with them. These foreign materials find their way into the Ghanaian construction market and eventually become ingrained in the system. People will then choose foreign items over local ones.

The current competition for doors between Turkey and China is such an example. Since the 1990s, local Ghanaian manufacturers or furniture corporations have been producing doors. However, there is a sudden demand for Turkish and Chinese doors. These doors are not the strongest, despite their aesthetic value. In fact, these doors have been used to break into several homes. Local Ghanaianreal estate and construction industry businesses are developing stronger doors with more secure locks, but Turkish and Chinese doors are more popular due to the foreign label.

In order to encourage foreign investments and economic growth, many African governments have adopted business-friendly economic policies that will make it simpler for foreign enterprises to operate in their countries. For starters, Ghana was one of the first countries in Sub-Saharan Africa to implement market-friendly economic reforms. As a result, the business environment in Ghana has substantially improved for foreign (and domestic) investment.

While economic policy reforms have generally eliminated the direct barriers to investment in most African countries, many indirect hurdles are believed to continually exist, limiting inward investment. Ghanian contracts come across many challenges while trying to thrive. The presence of foreign contractors and a lack of contractor capacity are among the difficulties.

Ghanaianreal estate and construction industry complain that the majority of Ghana's large projects are awarded to foreign contractors. A good way to subsidize this issue is that 25% of the work can be outsourced to local contractors with proven capabilities. Earlier, The Association of Road Contractors asserted that many of the tasks performed by foreign contractors' employees could be performed by local contractors and professionals. If a construction job is done by both foreign and Ghanaian contractors, it can largely solve the issue of local construction companies. It is quite clear that the entrance of foreign companies into the Ghanaianreal estate and construction industry seems to disrupt the balance of the industry.

Another issue that foreign companies create for local businesses in Ghana is that international enterprises receive the majority of building jobs, while local firms are relegated to local housing and other projects. When large occupations are outsourced to foreign corporations, there is a high proportion of imported items since the foreign companies prefer to import foreign materials rather than use local ones. This does not support the country's promotion of locally created items.

To address the issue of foreign materials being utilized in building construction in Ghana, an effort must be made to employ more locally produced materials in building construction. Real estate and construction industry should broaden their efforts beyond building residences to include infrastructural development. In this manner, they can be pushed for huge construction projects, and their effort will be visible and physically brought to new heights.

Also, we expect that by continuing to invest in local capability and reforming and reinvigorating the industry, more young engineers will be interested in pursuing a career in this field. Last but not least, there is an urgent need to re-examine and enhance the way we build to make processes more efficient and labour-intensive. Enhancing the quality of the construction workforce, encouraging the implementation of labour-saving technology, and supporting capacity building and manpower development among local builders are all measures that will help the built construction sector in Ghana achieve long-term sustainability and resilience.

When asked about present real estate and construction possibilities in Ghana, the majority of contractors expressed optimism that work will expand as the country's oil and gas sector develops. "There is construction activity related with the advent of the new business, offshore bases," one of the contractors stated. The oil and gas sector has a real estate component. Oil and gas will have an impact on other industries and areas of the economy. "Although the sector is competitive, there is not a lot of professionalism," one of the contractors explained, "so if you have a company with a lot of professionalism, you have a clear advantage over those who are not as professional with their job." Because of where we are in our economic development, the Real estate and construction industry is currently a growing industry in Ghana. For a genuine construction enterprise, there is a lot of room for expansion."

Final Thoughts

The economy of Ghana is rapidly growing and the Ghanaian, real estate and construction industry can take a lot of leverage from that. Indeed, it has been contributing to the economic prosperity of the country, but there is a lot more that can be done. With great infrastructure development, foreign investments bring several challenges to the local, real estate and construction industry in Ghana. However, these challenges can be solved by reforming the business reforms and allocating a certain percentage of jobs to local construction companies in foreign companies’ projects. Creating more efficient and labour-intensive processes, enhancing the quality of the construction workforce, encouraging the implementation of labour-saving technology, and supporting capacity building and manpower development among local builders are all measures that will help the built real estate and construction industry in Ghana.

The construction and building industry in Ghana is rapidly developing and is a significant contributor to the national economy in terms of GDP and job creation. A few years ago, there were just a few construction companies in Ghana. There were only a limited number of companies where you could get your supplies from. It was either Ghacem concrete, Osiadan Roofing tiles and K Ofori iron rods, just to mention a few. These were solely Ghanaian companies who were manufacturing their products in Ghana.

In recent times, there has been an inflow of foreign companies who have set up shop in Ghana and are slowly taking over the Ghanaian market. There has also been an increase in foreign finished products being used in building homes. International construction companies have their own materials they bring when they come into the country. These materials somehow get unto the Ghanaian market and then become a part of the system. People then opt for the foreign products instead of the local ones.

An example is the recent pursuit for doors from Turkey and China. Local firms or furniture companies have produced doors since the 90’s. However, now, there is a sudden desire for doors from Turkey and China. These doors, though having aesthetic value, are not the strongest of doors. Many a home have been broken into with these doors. Ghanaian local firms are building stronger doors with more secure locks but the Turkish and Chinese doors are purchased more because of the foreign tag placed on them.

One other problem that foreign companies pose to the local ones is that, international firms get the major construction jobs while the local firms are sidelined to local housing etc. By bringing in foreign companies for major jobs, there is a high rate of imported goods as the foreign companies choose to import their materials rather than use the local ones. This does not help with the promotion of locally manufactured goods in the country.

To curb the problem of foreign materials being used in the construction of buildings, there must be an effort to use more locally produced material in construction of buildings in Ghana. Construction firms and local real estate firms should look beyond building houses and expand their efforts to helping build infrastructure. This way they can be pushed for major construction jobs and their handiwork will be seen and taken to higher heights literally.

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