Towards establishing the “Construction Industry Development Authority” in Ghana

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Kenneth Kwaku
Kenneth Kwaku is a Member of Construction Industry Development Authority - “CIDA” Consultancy Team

Globally in the 21st century, infrastructure is the lifeblood of prosperity and economic confidence.

Successful delivery of well-planned infrastructure investments offers developing economies and for that matter Ghana, an opportunity to compete in the global marketplace. Construction is the mechanism through which infrastructure is delivered. Aside this key role, the contribution of the construction industry to the development of nations could be summed up through it forward and backward linkages with other sectors and industries of the economy.

By forward linkages, the output (product) of the construction industry serves as inputs (raw materials) of other industries. For instance, construction output including all types and forms of infrastructure like buildings, roads and dams, etc. are used as inputs by the financial, transport and energy sectors and industries. Backward linkage on the other hand relates the growth in the industries that supply construction inputs –i.e. building technicians and professionals and manufacturing companies – to the growth of the construction industry.

In fact, almost every economic activity is linked up with the construction industry. Therefore, the growth and development of any economy is directly or indirectly connected with the industry. For example, after a rural roads rehabilitation project in Ghana, costs for transporting goods and passengers fell by about one-third on average according to a World Bank report in 2000.The strong and significant positive correlation between infrastructure and growth in Africa has also been highlighted by numerous studies.  For instance, Escribano, Guasch, and Pena (2008) found that infrastructure has a substantial effect on total factor productivity.

The industry is therefore considered an economic backbone and major contributor to the gross domestic product (GDP) of Ghana. For instance, its contribution to GDP has shown an increasing trend from 8.5% to 11.8% from 2010 to 2013 respectively; a sign of its growing importance in the development of the nation.

This evidence notwithstanding, the construction industry in Ghana is substantially underdeveloped and plague with numerous constraints. Economic development cannot therefore be achieved on the back of a fragile developmental framework and ill-equipped industry. In this article, I explore some of the major constraints and discuss current initiatives towards developing the industry in Ghana.

The Challenges of the Construction Industry

The research landscape is replete with a number of studies that have identified the challenges of this industry. In a very recent study by Fugar, et al. (2013), seven challenges including; absence of a principal development regulatory body, inadequate financial resources, lack of investment in human resource development, inability to embrace change, low technology in the industry, lack of appreciation for workforce in the industryand high level of employee mobility were identified.

Common to most of the related extant literature is the absence of a central agency to regulate and ensure the continuous development of the construction industry (Fugar, et al., 2013; Osei, 2013; Ofori, 2012; Badu and Owusu-Manu, 2009; Gyadu-Asiedu, 2009; Ofori, 2000; Ahadzie, 2009). Thus, although there exist professional bodies of architects, surveyors, engineers, builders and technicians to regulate the activities of their members, these bodies are usually weak in enforcing rules, regulations and professional standards largely due to the lack of a legal mandate – membership has been optional for most them.

Externally, there is little or no coordination among these construction-related institutions and bodies -both public and private – although their activities dovetail into each other. Resulting, the construction industry is fragmented and lacks the needed cohesion to support the pace of development in Ghana. Moreover, output in this industry is usually substandard usually delivered with cost overruns and beyond timelines.

The construction industry in Ghana therefore faces some significant weaknesses. It is not well positioned to meet the challenges which it will face at home and in the West African sub-region in the near future. The internal weaknesses are compounded by difficulties in the operating environment of its component enterprises.

The poor performance of the industry has many negative implications for short-term economic growth and longer-term national development. It is necessary for systematic effort to be made to develop the industry. An agency which will spearhead this effort is required. In these regards, the country is well behind several African nations such as Kenya, Malawi, South Africa, Tanzania and Zambia in the development process.

Evidence of International Best Practice

Similar challenges in other emerging countries resulted in the establishment of central agencies to coordinate the activities of all construction works. Interestingly, most of these countries are making very remarkable strides comparatively towards economic development. It is widely acknowledge that a strong industry which is properly regulated by designated bodies is a major stimulator of development in these countries.

For instance, Singapore, Malaysia and South Africa have the Construction Industry Development Board (CIDB); Construction Industry Council (Hong Kong), Construction Industry Development Council (India), National Construction Services and Development Board (Indonesia) and the Institute for Construction Training and Development (Sri Lanka). Typically in Africa, countries like Zambia, Rwanda, Malawi, Kenya and Tanzania all have central bodies that are mainly responsible for the regulation and development of their construction industries.

The Way Forward

Going forward, both industry practitioners and academics are of the consensus that Ghana also needs a central body to deal with the aforementioned challenges.

Thus, championed by the Chartered Institute of Building (CIOB) – Ghana, Chaired by Mr Rockson Dogbegah, and funded by the Business Sector Advocacy Challenge (BUSAC) fund, a comprehensive study was commissioned to build upon a situational report undertaken by the Association of Building and Civil Engineering Contractors of Ghana (ABCECG).A Steering Committee made up of the Presidents of the Ghana Institution of Surveyors (GhIS), Ghana Institute of Architects (GIA), Ghana Institute of Planners (GIP), Ghana Contractors Association Council (GCAC), Ghana Institute of Technicians (GIT) and the Association of Building and Civil Engineering Contractors of Ghana (ABCECG) was set up by BUSAC to led the process towards establishing a central agency for the industry.

Further, a team of consultants led by Professor George Ofori (National University of Singapore) and supported by Dr. DeGraft Owusu-Manu and Mr. Michael Adesi(of the Kwame Nkrumah University of Science and Technology)and Mr. Kenneth A. Donkor-Hyiaman (University of Reading, UK) were tasked to:

1.      develop a case for the establishment of an agency to spearhead and administer the regulation and continuous development and upgrading of the industry in Ghana;

2.      design the architecture and operating framework of the regulatory and development agency for this industry in Ghana;

3.      prepare an action plan for the implementation of the proposals for improving the performance of the construction industry in Ghana.

The “Study on a Regulatory Agency for the Construction Industry in Ghana” which hinges on a baseline survey of stakeholders of the Ghanaian construction industry confirmed the aforementioned challenges revealed by previous studies. As part of the scope of works as agreed to by stakeholders at a workshop for dialogue on July 3 2014, Chaired by Surveyor Osei Asante and adopted by the Steering Committee, the report proposes for the establishment of a “Construction Industry Development Authority (CIDA)” under the parentage of the Ministry of Water Resources, Works and Housing to:

“lead the regulation, restructuring, continuous improvement and development of the construction industry in Ghana with the goal of enhancing the performance of the industry in order to derive optimum efficiency and effectiveness in its operations and outputs, to improve the quality of life of Ghanaians”.

Under its purview, the CIDA shall be responsible for the construction industry which may be defined:“as the part of the economy which plans, designs, builds, maintains, refurbishes, extends, and eventually demolishes buildings and items of infrastructure of all types”. The CIDA is therefore proposed to undertake eight (8) major activities of:

1.      championing and leading for the regulation and strategic development of this industry;

2.      advising the government on relevant aspects of the construction industry;

3.      formulating regulations, standards and codes to guide practice and procedure and nature of output in this industry;

4.      registering contractors and consultants, and enterprises linked to this industry, such as suppliers of materials, and monitor and control their performance;

5.      proposing guidelines and frameworks to help to streamline the work of, and promote good practice in, both public and private organisations involved in this industry;

6.      providing and administer incentive schemes to organisations to improve their performance;

7.      collecting, processing, maintaining and disseminating information that is crucial for activities in this industry;

8.      determining the needs of this industry, from time to time, and formulate strategies and programmes for attaining them.

To undertake the above-listed activities, it is proposed that the CIDA should set up regional offices with a headquarters in Accra and six (6) divisions as listed below to spearhead its operations:

1.      Construction Industry Regulation, Monitoring and Control;

2.      Business Development;

3.      Technology Development (including building materials);

4.      Human Resource Development;

5.      Enterprise Development and

6.      Industry Performance Programme.

Having fulfilled two (2) out of seven (7) action plans, including the drafting of a Bill for Parliament to pass into law for the establishment of the Construction Industry Development Authority, it is hoped that the subsequent processes of engaging government would be fruitful. The Steering Committee and BUSAC are very certain about the commitment of all stakeholders towards this landmark course for the development of the construction industry in Ghana. While the process is on course, all stakeholders would be engaged at all levels to address emerging concerns which could marred the hitherto success process.

Lesson Learnt and Concluding Remarks

The construction in Ghana faces numerous challenges including a weak regulatory and development framework, financial, human resource and material constraints beside others. The consensus reached between academics and industry practitioners is that of the need of a central agency to regulate, develop and coordinate the activities of all construction-related activities and bodies.

The “Study on a Regulatory Agency for the Construction Industry in Ghana” has made a case for such an agency in Ghana. Experience elsewhere shows that there is merit in adopting a centralized approach to this industry development.

The lessons are, first, that construction industry development is a deliberate activity which requires a long-term approach; second, industry development programmes require the involvement of various stakeholders of these industries to succeed, but the government should take the lead; and third, there are likely to be dissenting voices among the practitioners who might perceive that they might lose power or influence.

Another lesson is that country-specificity is key. Thus, it is important to understand the particular context which will influence change in Ghana. The action taken in Ghana must be the right kind of action for the country. Despite the many lessons which the country can learn from the experience of other nations, ultimately, only a truly Ghanaian solution will work.

The proposed CIDA will not be a panacea for all the issues facing the industry. For example, payment delays impact the growth of firms, and by so doing, have an adverse effect on the efforts by the nation to develop a network of construction firms able to deliver national assets, contribute to the economy of Ghana and enhance the quality of life of Ghanaians by giving value, utility and enjoyment in the buildings and infrastructure items they build.

However, CIDA cannot directly influence the efficiency of the national budgeting and financial administration regime. Thus, even after the formation of CIDA, action in other areas concerning the industry which lie outside the control of CIDA will be required.

Kenneth A. Donkor-Hyiaman is a member of “CIDA” Consultancy Team. He can be contacted at kwakuhyiaman@gmail.com

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