The construction sector is sinking into crisis
The National Federation of Building and Public Works (FNBTP) has just elected its new president, during an ordinary elective general meeting (OEGM) held on Tuesday, June 28, in Rabat. The new president is Mohamed Mahboub who will take over from the outgoing president, El Mouloudi Benhamane.
The mission of the new management of the federation will not be easy, given the critical situation in which the construction sector finds itself. The causes of this crisis were apprehended by the outgoing president in his speech delivered on the occasion of the holding of the OEGM. After a flourishing period in the construction sector between 2000 and 2012, the latter is gradually moving towards a crisis which will worsen further following an unfavorable international situation marked by the ongoing military conflict between Russia and Ukraine. The first blow taken by the construction sector dates back to 2013, when the government decided to remove 15 billion MAD from the budget of the Ministry of Equipment, remembers the former president of the FNBTP federation. That measure has reduced the volume of public orders for companies in the sector. That measure has also sparked fierce and unfair competition from the informal sector, particularly in construction, which has led to a spiral of price cuts in the bids from companies. The situation worsened further with the arrival of the pandemic. “The drop in activity and the continuation of the price crash will put the entire sector in danger, leading to the collapse of prices and the explosion of a form of unfair competition”, observes Benhamane. Thus, public or private project owners will be forced to accept offers that have no relation to reality, he adds. This will negatively impact the cash flow of construction companies by dragging them into a vicious circle of dependence on banks that are reluctant to support construction companies in times of crisis. Another dark spot is that of late payments by project owners who are criticized for not applying national preference in terms of calls for tenders. “This crisis in the sector could result in layoffs estimated at nearly 200,000 jobs”, Benhamane warns.
Today, the war between Russia and Ukraine is a deathblow for the construction industry. It triggered an inflationary spiral in the prices of building materials and energy. For diesel, the price per liter has doubled from 8 Dirhams to more 17 Dirhams currently, recalls the former president of the FNBTP. The same goes for steel, the price of which has reached 14 MAD versus 7 MAD per kilo and also that of bitumen previously purchased at 5,000 MAD per ton versus nearly 9,000 MAD currently.
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