NASSAU, BAHAMAS — The outlook for the Bahamian construction sector in 2024 remains positive, coming off what was, for some, one of the best years in over a decade, according to Bahamian Contractors Association (BCA) president Leonard Sand,s who also expressed concern that antitrust or anti-monopoly legislation may become necessary to ensure that smaller players get a piece of the pie.
"I think we are in a place where we are doing well as an industry, and the outlook will be positive. I think one of the concerns is that we are becoming a place where the smaller players are having a more difficult time securing work," Sands told Eyewitness News.
"The bigger developers and more established companies are having their best year ever. One person told me that 2023 was one of the best years in 15 years, and that's thanks to the profits they were able to enjoy."
Sands noted, however, that outside of the government contracts that smaller players can get a shot at, there is still concern in the market that there is not a lot of good work to spread around.
"You can't fix a lot for those things apart from perhaps making it easier for the smaller contractors to access the funding they need to compete on larger projects. Policies looking at construction to generate growth, I think, need to be a part of this administration's conversation as we try to make the construction sector even better than in 2024. How do you ensure there's enough work? There has to be enough space with billions of dollars worth of projects at the table for everyone to eat. That's one of the concerns the BCA has when we look at the industry in 2024," said Sands.
While there have been at least two large construction firms that have exited the sector in recent years, Sands said that those firms have been replaced by three or four others.
"We don't have a scaling down of the big players; in fact, some of the big players have diversified and split their companies into two and three subsidiaries, doing several types of work as a big conglomerate. We may have to consider antitrust legislation. There are one or two players that are so large that they have monopolized a large chunk of the very large work in the sector. There is no law preventing it, but it makes it very uncompetitive to go against it. We may have to look at, in this developing nation, how we formulate legislation to address antitrust scenarios where someone has a $500 million capitalization, and someone has $2 million, and they're both competing on a $10 million shopping plaza," said Sands.
He added: "It's a new dynamic we have to look at in the future of construction in the country. Some players are large; they cover all the scopes; they're everything. When they come to the table, they take up every seat. I can't knock them after years of growing and doing things in the industry, but I think it's something we have to look at."
The Central Bank announced just before the new year that it is relaxing the lending rules for residential mortgages provided by domestic banks and credit unions by revising the minimum equity injection requirement, a move expected to alleviate the financial burden for qualified borrowers and allow some additional individuals to qualify for credit.
The regulator announced that "with immediate effect," the mortgage indemnity insurance is removed from the Central Bank's stipulation for borrowers to qualify for a reduced equity or down payment on residential mortgages.
Commenting on that development, Sands stated: "I think the knock-on effect overall is that we will see a general increase in overall domestic spending because of their relaxed policy. For several years, we have noted that the increased requirements by the Clearing Banks have made it difficult for persons to obtain residential mortgages. I think that's a big deal for construction coming out the gate in 2024."
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