In the wake of the 2015 elections that brought about a change in government, there were reports of a slowdown in business. The large business houses reported fewer visitors; auto dealers reported a slowdown in vehicle sales and importers reduced the extent of their imports.
Indeed, such a pattern is natural in a country in which elections provide for a measure of uncertainty. In the not too distant past, elections were accompanied by violence and property destruction. The result is that the business community, in an effort to minimize the extent of losses, simply declined to maintain the rate of investment.
To the casual observer, not much had changed from what operated prior to the elections. Those who had disposable income spent as usual; those who had smaller incomes, among them the public servants, did what they had grown accustomed to doing—spend sparingly.
Perhaps the greatest indication of an economic slowdown can be found in the housing sector. Many who were rushing to acquire turnkey homes found that their progress was stalled simply because the new administration began to examine the ongoing situation. But this should only be so at the governmental level. At the private developer level, the situation should be markedly different.
There was a marked slowing down in construction activity at the level of the private housing developers but this could not be attributed to economic activity at the larger scale. For one, there were people who complained that the construction was not as solid as it should be with the result that many people after taking possession of the home, had to embark on repairs and modifications almost immediately.
Just this past month, the Minister with responsibility for housing visited some of the housing development estates and found a lot wanting. Many had not fulfilled the conditions that led to the acquisition of the land. Some had not even completed payment for the land. The reality is that they have been accused of speculating.
The commercial banks, bursting at the seams with liquidity, are anxious to make sizeable investments in the housing sector. They have been granting low-interest loans to potential home owners who in turn are complaining that they are stalled. They have the money from the bank, some of which they have advanced to the housing developer but they are not seeing any advancement in the building process.
For their part, the developer seems reluctant to use his own money, choosing instead to wait on the potential home owners’ money to undertake the construction. At the same time, the potential homeowner is not happy having to pay interest on their loans and not having the result of the loan.
These factors help create the dramatic slowing down of the economy. Economists would say that a stimulus is needed and they are not wrong. For all, the talk about allowing the private sector to promote development the government must inject some money, if only as a bait for the private sector development.
It may not be a bad idea if the government were to actually help with the housing construction. This would create employment for certain skilled people in the society. There would also be the housing expansion that would lead to the establishment of even more businesses. That was what the previous government had in mind when it shared out large tracts of land to private developers. It is unfortunate that many of these developers did not pursue the planned programme.
Diamond Housing Scheme is an excellent example of private development. This was done at the individual level. What started as a means to allow for affordable homes led to the development of another city centre with a post office, commercial banks and a police station. An economic stimulus does that to communities and to the country.
Increased public spending may not be the best thing at this time but it may be the only thing that could provide the spark the economy needs.