Construction Sector Faces Major Setback As BOG Warns of Shortage in Building Materials.
This is a pretty bad time to invest in a building or infrastructure project as the Ukraine conflict is causing critical building material shortages and price hikes that have had a negative knock-on effect on the global supply chain.
The bank of Ghana is warning the construction industry faces some major challenges in the coming weeks if the ongoing war between Russia and Ukraine continues. Already prices of building materials on the market are fast rising and the phenomenon is expected to worsen in the coming days. The price of iron rods, cement, and other building materials have all gone up within the last few weeks. Iron rods for instance have gone up by over 30% since the beginning of the month with a ton of iron rods going up from 6,200 cedis to 8400 cedis and more.
Ghanaian contractors face a triple threat of war, inflation, and supply chain snarls as they struggle to source building materials for their construction. Experts say the conflict is likely to drive fuel, copper, and aluminum prices higher, while cargo ships in the area have been halted or delayed. Russia produces large quantities of aluminum and copper, which prices have already increased by 33 % and 25%, respectively in January. That means prices of materials forged from those metals could inflate even higher. Materials such as external facades, roofs, and walls, windows and doors, staircases, railings, shelves, and other several applications including electrical wiring made of copper are all likely to see price hikes.
Last month, the Chairman of the Energy Intensive Users Group(EIUG), Richard Leese said manufacturers of steel, chemicals, glass, cement, and bricks will have to try and pass on extra costs to building industry customers “as much as they can”.
According to the Banking Regulator, the country’s major imports from Ukraine, iron ore and steel, account for over 60 percent of the total iron ore and steel imports into the country. The BOG says the industry will likely face some challenges in terms of supply disruptions and prices of steel and iron ore imports due to the current geopolitical unrests.