ASSESSMENT ON THE IMPACT OF INFLATION ON THE PERFORMANCE OF CONSTRUCTION SECTORS OVER THE LAST 4 YEARS IN ADDIS ABABA, ETHIOPIA

Abstract

This research paper explores the impact of inflation on the construction industry in Addis Ababa, Ethiopia, over the last four years, using a variety of construction performance metrics. The study looks at how inflation affects things like material costs, housing affordability, finance, currency depreciation, consumer spending, property values, and job availability. A mixed methods approach is used to ensure a thorough analysis, incorporating qualitative and quantitative data collection and analysis procedures. The selection technique employed in this study was convenience sampling, in which participants were chosen based on their accessibility and desire to participate rather than using a random or systematic sampling approach. The convenience sample method was chosen for its practicality and ease of data collection from individuals representing diverse industries pertinent to the building construction industry in Addis Ababa. Data was collected over a 45-day period from 10 sub-cities in Addis Ababa, using a sample of people from various industries related to the construction industry. Contractors, architects/engineers, government workers, economists, bankers, real estate developers, construction material suppliers, and college/university students were among those that took part. The SPSS programme version 25 was used for quantitative data analysis. To characterise the variables, descriptive statistics were used, which provided metrics such as mean, median, standard deviation, minimum, and maximum values. Partial correlation analysis was used to analyse relationships between variables when data was not normally distributed. In addition, ordinal regression analysis was used to investigate the associations between inflation-related independent factors and the dependent variable reflecting construction sector performance. The questionnaire was completed by 396 people, offering significant information into the impact of inflation on the Addis Ababa building construction industry. The participants' different backgrounds and expertise contributed to a complete understanding of the industry's issues and potential. According to the findings, inflation, combined with currency depreciation, has resulted in lower consumer spending, lower property prices, and higher import costs for construction supplies. The paper proposes strategies to mitigate the impact of inflation on the construction sector based on these findings. These efforts include lowering material prices, increasing access to affordable housing, encouraging collaboration between the government and industry partners, and promoting sustainable construction practises. The study offers light on the impact of inflation on the Addis Ababa building construction industry during the last four years. The combination of quantitative data analysis methodologies and a large participant sample improves the findings' validity and comprehensiveness. The paper identifies the issues that construction firms confront and suggests strategies to alleviate the negative effects of inflation, thereby promoting a more sustainable and resilient construction sector.