There is this phenomenon I have studied over the years, the little or no importance stakeholders of the construction industry attach to the budget statement and economic policy of various governments. Unlike the general business community that takes keen interest in budget statements, our construction industry does not. To us, everything is about technical knowledge. We fail to appreciate the fact that it is not just enough to have the technical know-how but one has to be business-minded enough to be able to convert this technical know-how into physical cash.

This reminds me of an article I read a couple of days ago where the Chief Executive Officer of the Ghana National Chamber of Commerce and Industry (GNCCI) Mr. Mark Badu-Aboagye is reported on record to have commented on the 2025 Budget Statement and Economic Policy of the government with particular reference on the impact of the current VAT system which in his opinion has negative implications on the smooth operations and profitability of businesses. This he told the Accra Street Journal on March 13, 2025. The question I asked myself after reading the article was, what has been the position of the Ghana Construction Industry on the 2025 Budget Statement and Economy Policy of government until now. But anyway, let me leave this as a rhetorical question, less I incur the displeasure of others even though it is a legitimate question.

This has always been the posture of the industry over the years, but the world has revolutionized, it is no longer enough to have a profession but how to convert your professional practice into a brand that can cross national boarders and transcend generations. It is for this reason that I have taken this upon myself to set the pace by this article to digest what the 2025 Budget Statement and Economic Policy could mean to the construction industry in Ghana.

It is my prayer that having blazed this trail, the industry will begin to take keen interest in Budget Statements going forward whilst devising plans and strategies in lobbying with various  governments before during and after the reading of national budgets.  This will make the economic policy makers understand the dynamics of our industry better so that decision making will always align with the fundamentals to serve specific needs of our industry.

Our focus will be on the budgetary provisions that relates to the construction industry and their implications on the functioning and operations of the industry. One thing we should bear in mind is that whether we like it or not, every budget has provisions that impact our sector in one way of the other. Therefore, our information about the budget and the subsequent use of what is provided for us is key to the overall success of the sector and by extension, the nation.

Stalled Projects

First and foremost, according to section (74) (75) and (76) of the 2025 Budget Statement and Economic Policy, there is a staggering number of 55 stalled projects over the past eight (8) years. This has left a whopping sum of about USD$3 billion in undisbursed loans and about US$300 million in outstanding interim payment certificates (IPCs). The statement went further to list a few of these stalled projects among which were the; Effia Nkwanta Regional Hospital, Kejetia Market Phase 2, Bolgatanga-Bawku Pulimakom road project and Tema-Aflao road project etc. Furthermore, section (92) also stated the outstanding cocoa road contracts reaching a tune GH¢21 billion.

What does this mean to the construction industry? Should we celebrate because it has been captured in the budget to be taken care of. Many of these contractors have already demobilized from their various sites. A classic example is the reportage that showed a contractor demobilizing from the Takoradi Interchange project in the roundup to the December polls in 2024.

We all know that demobilizing is a significant cost, now these contractors are going to remobilize which is another significant cost. This will automatically affect the profit margins of these contractors. Apart from this, the delay in payment to these contractors is a significant loss considering the time value of money even interest may be applied. Besides, the Finance Minister was also very clear in his statement that it will take 12 years from now to complete these projects considering the IMF’s conditionality which imposes an annual disbursement ceiling of USD$250million for official bilateral loans. This has always been the case with the construction industry, the delayed payments to contractors has been the biggest challenge local contractors face with all governments of the day. It is about time we adopt proactive ways of dealing with governments to mitigate these delayed payments that have always rendered the industry seriously incapacitated. Apart from the damage that has been caused already as a result of the stalled projects, it is great news to see government’s commitment to resume these projects.

It is going to stimulate industry growth with a trickling down effect on the supply chain. This will stimulate demand for labor, materials, equipment etc. The question is, are sector players really aware of this and taking conscious steps in preparation for this?.  Maybe as usual, we wait patiently to be taken by surprise before we begin to complain as it has always been the case with us. This is because there is no sign of enthusiasm whatsoever about the rejuvenation of these projects neither is there any sign of preparation for it either.

Road Tolls and Its Impact

Section (160) and (161) of the 2025 Budget Statement and Economy Policy stated that  “while the annual average collections from road tolls have not been significant compared to its potential, the existing zero-rate policy for road tolls has exacerbated the situation and dimmed any prospects of raising enough revenue from tolls for road construction and maintenance. “Accordingly, government will work with stakeholders, including the private sector, to roll out a technology-driven solution to re-introduce road tolls in 2025 as part of the Big Push Program”. In addition to this welcoming news is the uncapping of the road fund as captured in section (213) of the budget which will grant access to an amount of Gh¢2.81 billion to be used solely for road maintenance.

This is exciting news for the road sector in particular and by extension the general construction industry. For some time now, road networks in many parts of the country are in bad state for lack of routine maintenance. This has not only extended commuting time for commuters but also increasing cost of vehicular maintenance. On the flip side is the lack of job for the road sector leading to many of these companies almost folding up operations.

It is also good news for us to adopt a more advanced and efficient toll collection system as proposed by section (161) of the budget statement. This reminds me of an article that was published by the National President of the Institute of Engineering and Technology, Ghana (IET-GH) His Excellency Engr. Henry Kwabena Boateng who proposed the adoption of a more inclusive system of toll collection by incorporating it into the roadworthy certification fees which I think is the most efficient method to adopt. It will eliminate the unwarranted heavy vehicular traffic that characterized our toll booths those days. Besides, it will also eliminate embezzlement by the toll collectors themselves and also toll levy evasion by many drivers which used to be a common practice.

What this means to the construction industry is the return of job creation to road contractors and the trickling down effect of the sectorial supply chain. This is the time that sector players should start building and mobilizing capacity in preparation for this rejuvenation of the road sector.

Property Rate (Impact on the Sector)

Section (163) of the 2025 Budget statement and economic policy proposed a reform to explore and operationalize a regulatory framework for the collection, management and reporting of property rates consistent with the Medium-Term Revenue Strategy (2024-2027) and the Local Government Act. This is an attempt to rejuvenate the ineffective property rate regime that was introduced by the Local Governance Act, 2016, Act 963 with Section 144, 146, 152 and 164 which outlined the framework for property rate imposition and collection by the Metropolitan and District Assemblies (MMDAs).

What does an effective property rate and implementation system mean to the construction industry (real estate and property sector). Even though this is going to rake-in a lot of revenue for the state, it may lead to a general property price hikes since these taxes are likely to be passed on to end users. This is a sector that has already been plagued with low occupancy rate for commercial spaces, arbitrary and prohibitive pricing over the years occasioned by speculative valuations etc.

Therefore, government should be mindful that this property rate does not lead to under patronage in the real estate and property sector. This may lead to a mass boycott of commercial spaces by businesses and exacerbate the mass exodus of the low income earners into slum communities as it has been the trend in recent past. But whether we like it or not, government will streamline and implement it. The question now is, how conscious and prepared are sector players to weather this storm are. This is why it is important for industry practitioners to be interested in the budget statement so that strategies could be put in place to absorb the shocks.

Plummeting Treasury Bill Rate

Section (186), (187), (188) and (190) reported on the Treasury bill rates taking a nosedive “as a result of government’s proactive fiscal management. This achievement is a testament to the positive shift in investor sentiment regarding our country’s economic outlook” leading to a precipitous decline in the 91 and 182 day Treasury Bill rates from 28.19% to 17.72% and 28.92% to 18.97 respectively, as at Friday 7th March 2025 whilst the 364-day treasury bill rate declined significantly from 30.15% to 19.93%.

This has led to a combine “average fall in rate by over a 1000 basis points, signifying a strong investor confidence, crowding-in the private sector, reduction in the cost of doing business”.

But because of the speculative nature of these fallen rates, we are unable to guarantee its sustainability in the long term, but whatever the case may be, lower Treasury Bill rates makes borrowing cheaper for government. What does this mean again to our industry?. When government borrows cheaper and increases spending in productive sectors of the economy, it will lead to an expansion in the economy that will have a positive trickling down effect on all sectors of the economy of which the construction industry in no exception. This is the reason why it is important for the institutional stakeholders of our industry and by extension the individual practitioners to get prepared in terms of financial, manpower, machine power etc for this big boom that is about to happen.

24hr Economy and the Big Push Program

Section (191) and (195) “rolled out the implementation of a $10 billion “Big Push” policy for strategic infrastructural development to open up the country and drive sustainable economic growth and transformation under the 24-Hour Economy policy and the subsequent budgetary allocation of Ghs ¢13.85 billion for the Big Push Program take-off,” the Budget Statement said. For me this is where the jackpot is for the Ghanaian construction industry.  This is a huge opportunity for the Ghana construction industry, but the question again is how prepared are we for this opportunity.

In my opinion this is the time that the institutional stakeholders should be holding strategic meetings on how we can revitalize sector players, build capacities by mergers, partnerships, collaborations etc whilst lobbying with the banking sector for liquidity guarantees in readiness for this big opportunity ahead of us. We are all aware that many of these opportunities elude local players on the grounds of lack of capacity.  But what has changed over the years, nothing.

Everyone is still playing solo in their own small capacity leading to a shift in all our local contracts to multinationals. Apart from this, it is also important for the institutional stakeholders to take it upon themselves in engaging every government of the day before the budget, contributing inputs to the budget in relation to the sector whilst presenting a consolidated and united front detailing a resilient local capacity that can undertake any project of any magnitude.  But we have always stayed fractured and wait for the politicians to award all the bigger contracts to multinationals so we now go and grant radio and TV interviews and lament over government’s neglect of local content.

National Apprenticeship Program

Section (218) reported on an allocated amount of GH¢300 million to the National Apprenticeship Program to train the requisite manpower for all sectors of the economy. This is a general budgetary allocation. The question one may ask again is, where is our strategic blueprint as an industry to take advantage of this budgetary allocation to salvage our industry from its current perennial labor quagmire that has transcended from quality crises to an acute shortage in recent times.  

According to the World Bank (2020) there was a significant mismatch between demand and the supply of construction industry skilled labor such as painters, carpenters, masons, etc leaving an estimated deficit of about 70,000. The situation even got worst with the advent of the illegal mining-boom that took place in the past 8years which witness the abandonment and migration of majority of our artisans into illegal mining sites. I know some people for some reasons will pretend and try to treat this with contempt but the evidence is so clear, the proliferation of our industry with artisans from Benin Republic, Togo, Nigeria etc.

This budgetary allocation is an opportunity for our industry to lobby for a bigger chunk of this Ghs 300million to train more artisans to bridge this gap. In this regard we will need a robust training capacity, that is training centers, quality facilitators/masters etc. The question I keep asking throughout is, are we ready for this?. If we fail, everything goes to the other sectors of the economy.

Conclusion

It is important for us to understand that, the budget statement and economic policy is government’s spending policy framework that affects everything whether we agree, like it or not. However, our ability to appreciate the provisions and their impact on our industry is fundamental. That is the more reason why we should begin appreciate the fact also that, it is no longer about the brick and mortar. Finally, regarding the architecture of our system, it is quite organized as it is now compared to some other jurisdictions even though a built environment authority would have been the ultimate. We have a chamber of construction that has all the industry associations or bodies as institutional members. We do not need any capacity or unity more than this to be able to make the change that we want. We only need leadership that is bold enough to face and stand for the right thing. If we can do this, success is guaranteed.

References

• Budget Statement (2025): The 2025 Budget Statement and Economic Policy
• World Bank (2020): Skilled Labor Shortage in the Construction Industry
• Local Governance Act, 2016, (Act 963): Section 144, 146, 152 and 164.

.