The Tribune

• Contractor chief: ‘Windfall’ can be much greater

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian Contractors Association’s (BCA) president says the construction industry is still being treated like a “step child” despite data showing it is already a $1bn per year industry.

Leonard Sands told Tribune Business the industry’s economic contribution would be even greater if the Government fully enacts the Construction Contractors Act’s self-regulatory and licensing regime as it would give more developers and investors confidence to do business in The Bahamas.

Speaking after the Bahamas National Statistical Institute revealed that construction permits issued in 2022 were valued at a combined $1.044bn, representing a $337.588m or 48 percent year-over-year increase, he added that the BCA was fielding “at least two calls per week” from US and European investors who are ultimately deterred from coming to The Bahamas by the absence of construction industry regulation.

Mr Sands told this newspaper that, as a result, the sector and wider economy are missing out on a significant “windfall” as he suggested the industry’s contribution could expand from the $340.16m worth of construction starts enjoyed in 2022 to closer to $1bn per year.

Questioning why an industry responsible for $1bn in new permits is still not regulated, with no licensing or certification regime for its contractors, the BCA chief said: “I’ve said it before and will say it again, and say it stronger this time. If the Construction Contractors Act becomes fully enacted, with the appointment of a Board to licence contractors and a process for contractors to be licensed, the $340m in starts you’re seeing for 2022 would triple to $1bn a year.

“That’s the magnitude of what investors are waiting on to spend money in The Bahamas. I said two years ago that all the Government of The Bahamas is doing is holding up a windfall for contractors and a windfall for the country. If they want to see that number [starts] hit $1bn a year, have licensing for contractors. 

“We have persons calling the BCA wanting to do projects here, joint venture with Bahamian contractors, but they’re not prepared to do that without a legal framework in place and, until such time as it is in place they will keep their millions in their home jurisdiction. I’ve explained that to the minister, explained that to the Prime Minister. We’re waiting for them to do the right thing so we can triple the value of construction starts we had in 2022.”

The Act was passed into law in 2016 with now-prime minister, Philip Davis KC, the then-minister of works, the Cabinet member primarily responsible for bringing it to Parliament. However, it has never been brought into practical effect because the joint public-private sector Board that is supposed to oversee the industry’s self-regulation, and the licensing/certification of contractors according to ability and scope of work performed, has never been appointed.

The initial “grandfathering in” period for all pre-existing contractors under the Act also expired in 2018 and now has to be reset. This period was designed to give all contractors wishing to practice sufficient time to apply to the Board to be registered and licensed. As a result, the Bahamian construction industry remains arguably the largest and most important sector not to have its own regulatory body or licensing criteria that would help set industry standards and qualifications.

Contrasting this to the likes of Bahamian engineers and architects, both of whom are self-regulated by such bodies, Mr Sands told this newspaper: “We feel like the step child of the professions in the country. That shouldn’t be. Neither the engineers nor the architects represent the value of GDP that construction contributes to this country.

“Construction across the entire country is just under $1bn a year. They know this, they recognise this, but continue to treat our industry as if we don’t matter. I want to see how transformative this administration is going to be as they’ve spent the last two years finding reasons why they cannot do this. The country cannot wait any longer.”

Clay Sweeting yesterday replaced Alfred Sears KC as minister of works in the Prime Minister’s Cabinet reshuffle, so he will now likely have responsibility for the construction industry. Mr Sands, meanwhile, added: “We get at least two calls a week from investors in the US and Europe, making inquiries.

“They want to do business, and ask questions about becoming a general contractor in The Bahamas, and they have a project they’re looking at doing. We have to be real and say that we don’t have a licensing regime in The Bahamas. They tell us to let them now when we get it together, and they will come and do some business in The Bahamas.”

The Bahamas National Statistical Institute, using data obtained from the Ministry of Works, Grand Bahama Port Authority and Family Island administrators, unveiled data suggesting the construction industry maintained its post-COVID rebound in 2022. While total construction starts declined in number by 58 or 10 percent, falling from 601 to 543 year-over-year, their combined value rose by $26.448m or 8 percent to $340.16m compared to $313.712m in 2021.

As for construction completions across The Bahamas, these increased by 12 percent or 75 to 700, with the corresponding cumulative value surging by 42 percent to finish $128.161m higher at $435.452m compared to $307.291m the prior year.

“The total number of permits issued for all The Bahamas was 1,584 for the period 2022, an increase of six projects when compared to 1,578 projects issued in 2021,” the Institute said. “There was also an increase in the value of permits during this period of approximately $338m. In the private/residential sector, the number of permits issued in 2022 was 1,266 compared with 1,285 in 2021, which showed a decrease of 19 projects and a corresponding decrease in value of $45m.

“The commercial/industrial sector had an increase of five projects while the public sector permits issued doubled when compared to 2021, moving from 20 projects to 40 in 2022. The commercial/industrial and the public sectors both had increases in the value of permits issued of $373m and approximately $9m, respectively.”

Broken down by island, New Providence saw the total value of issued construction permits increase by almost 22 percent or $132m year-over-year, rising from $605.194m to $737.516m. Grand Bahama was flat at $73.967m compared to $66.757m the year before, while the Family Islands saw a more than seven-fold jump in construction permit value - from $34.516m in 2021 to $232.572m.

“The total number of construction starts showed a decrease of 58 projects when compared to 601 projects started in 2021. However, there was an increase in the total value of $26m,” the Institute said. “The private/residential sector starts decreased by 28 projects, while showing an increase in the value of approximately $142m.

“The commercial/industrial sector starts decreased by 33 projects and the value also decreased by approximately $118m. Conversely, the public sector had an increase in the number of projects started by three units and an increased value of approximately $2m.” New Providence accounted for more than $308m in new construction starts, and Grand Bahama over $30m.

“The construction completions increased in total number by 75 projects completed. The number of private/residential sector completions increased by 90, while the commercial/industrial sector decreased by 12 and the Public Sector by three,” the Institute added.

“There was an increase in the value of completions in the private/residential sector of approximately $41m and the commercial/industrial sector of approximately $101m, while the public sector completions value decreased by approximately $14m.”

Mr Sands said much of the increase was likely sparked by investors deciding to proceed with previously-planned projects that were delayed by the COVID pandemic. He added that the value of completions, plus construction starts and permits issued, was also increased to some extent by global and local inflationary pressures which have raised both building material and labour costs.