Prepared by: Deric Owusu- Boateng Esq.

ABSTRACT

Construction is critical for the growth and development of every nation and Ghana is no exception, contributing an average 2735.47 million Ghana Cedis from 2016 until 2018, reaching an all-time high of 3587.37 million Ghana Cedis in the 3rd Quarter of 2018 representing some 14.2 percent of the Gross Domestic Product.

It is a sector that has serious implications for the environment, spatial planning, economic planning, land use policy, safety and risk related issues. Consequently, it is particularly laden with a mass of legislation.

 Apart from article 41(k) of the 1992 Constitution which speaks directly to matters of environment, there exists a gamut of laws that directly and indirectly affect the construction sector. The year 2016 in particular saw major legislations such as the Local Governance Act, Act 936 and the Land Use and Spatial Planning Act, Act 925 being passed.  These together with the National Building Regulations 1996, LI 1630 and the recently promulgated Building Code 2018, GS 1207 are expected to transform the entire construction sector. Supporting these legislations are the Insurance Act 2006, Act 724, and Environmental regulations that are in place to regulate and mitigate any adverse effects of construction activities.

The Procurement Act 2002, Act 663 (as amended) and the National Policy on Public-Private Partnership (bill yet to be passed by parliament) provide some incentives that players in the construction industry can leverage for their businesses growth.

Regardless of the plethora of laws in the sector, there exists some legislative gaps which pose challenges. Legal practitioners are encouraged to see these challenges as opportunities for not only career advancement but also as a means of making impact in the Construction sector.

1.0      Introduction

The contribution of construction activities to the Gross Domestic Product (GDP) of Ghana averaged 2735.47 million Ghana Cedis from 2016 until 2018, reaching an all-time high of 3587.37 million Ghana Cedis in the 3rd Quarter of 2018 representing some 14.2 percent of the Gross Domestic Product. It is projected that GDP from construction is expected to reach 4344 million Ghana Cedis in 2020. (Source Business Ghana 2018). The sector presently employs about 2 percent of the population of young people. It is expected to create between 700,000 to 1m jobs in the next 10 years.

There are a number of laws that have been enacted to regulate the sector due to the cascading effects that accompany construction activities.

The author takes a broad look at the various legislations that directly and indirectly affect the construction sector, identifies some legislative gaps and throws challenge to legal practitioners to see these as opportunities for transformation within the sector.

2.0      Implications for the sector

The activities within the Construction sector have a number of implications for:

  1. Spatial planning considerations for national development
  2. Natural Environmental management
  3. Land Use policy
  4. Safety and risk related issues to other persons directly or indirectly.
  5. National Economic development

These implications underpin the various legislation so far developed in the country, and a number of them that are in the offing.

3.0      Categories of Construction:

For the purpose of this presentation, I have categorised construction into three key areas namely:

  1. Private non-commercial construction activities
  2. Private Commercial construction activities
  3. National projects usually executed by governments through contractual arrangements with local private sector/foreign partners under several transaction models.

4.0      Legal Framework.

The construction industry is greatly affected by a mass of statute and regulations in the areas of standard setting, permits and authorizations, consents and registrations and other general statutes that apply to construction or the built industry/sector.

  • The Constitution:

Article 41 (k) of the 1992 Constitution places a duty on every citizen to protect and safeguard the environment.

  • National Development Planning Commission Act 1994, (Act 479):

Section 2 (2)(c) provides as part of the functions of the Commission to make proposals for the protection  of the natural and physical environment with a view to ensuring that development strategies and programs are in conformity with sound environmental principles.

  • Local Governance Act, 2016 (Act 936)

This Act harmonises 5 existing legislation on local governance and provides a one stop shop document on all local governance issues.

  1. This Act recognizes each District Assembly as the Planning Authority with planning functions for the district through the District Planning Coordinating Units of the District. One key responsibility imposed on the Planning Authority at the District is to prepare a settlement structure plan in accordance with provisions of any enactment on planning relevant to the preparation of the settlement structure plan.(sections 82,83-84)
  2. In additions, it imposes an obligation on all persons to comply with approved development plans, failing which the District planning authority may prohibit, abate, alter, remove or demolish a physical development that does not conform to an approved District development plan.
  3. It provides a mandatory requirement for every physical development carried out in the district to be covered by an approval in the form of written permit granted by the District Planning prior to any development. (section 91)
  • General Procedure on Enforcement by DPA

The DPA shall serve notice in the form prescribed by Regulations on the owner of the land in respect of the action the Authority proposes to take. Such notice shall state the nature of and grounds upon which the DPA proposes to take the action. (s. 95(2-3))

  • Procedure in the event of nuisance

The DPA may serve notice on a person to abate a nuisance within a specified time where substantial injury to the environment, amenity, public health or the economy has been caused by the nuisance or is likely to be caused from the action or inaction of that person. The notice shall specify the nuisance and the steps required to be taken to abate the nuisance. If the notice is not complied with, the DPA may carry out the abatement and recover the costs from the person who caused the nuisance.

  • DPA’s Action for Unauthorised Construction/Development

If the development is unauthorized, the DPA may effect an instant prohibition, abatement, alteration, removal or demolition of any unauthorized development carried out or being carried out that encroaches or will encroach the community’s right of space. The action to stop the encroachment on the community right of space shall be without prior notice.

This provision changes the decision of the Courts in the cases of:

  1. Randolph v Accra City Council [1975] 2GLR 198

The plaintiff claimed ¢50,000 damages from the Accra City Council for wrongfully entering and demolishing her two-storey house. The council contended that they were justified in their action by virtue of the powers conferred on them by section 44 of the Local Government Act, 1971 (Act 359), in that the building was in a ruinous state of repair and the plaintiff had failed to comply with dangerous building order served on her requiring her to repair the building.

Held: the defendant council failed to comply with the provisions of section 44 of Act 359 inasmuch as following the plaintiff’s failure to repair the building no complaint was made to a district magistrate and no magisterial order requiring the plaintiff to pull down her property was obtained as required by section 44 (2) and (3). The act of the defendants in demolishing the plaintiff’s house therefore was wrongful and the plaintiff was entitled to recover damages.

  • Compensation:

An aggrieved person whose property is adversely affected or whose permit is subsequently varied or revoked may lodge a claim for redress or compensation with the DPA within 6 months after the date of the specific action complained about.

  • Appeals

A person aggrieved by a decision or the action of a District Planning Authority in connection with a District Development Plan, may appeal to the Regional Minister who shall refer the appeal to the Appeals Advisory Committee within one month after receipt of the  notice of the decision or action.

  • Penalty for contravention

A person who contravenes the terms of a permit, commits an offence and is liable on summary conviction to a fine of not less than two hundred penalty units and not more than four hundred penalty units or to a term of imprisonment of not less than three month or more than 6 months or to both the fine and term of imprisonment and in the case of a continuing offence to a fine of not more than four penalty units for each day that the contravention continues after written notice of the contravention has been served on the offender.

  • Land Use and Spatial Planning Act 2016, Act 925 (sections 96, 97,98,99)

This Act, LUSPA, enhances the planning requirements under the repealed Town and Country Planning and the planning functions of the District Assemblies under Part 2 of the Local Government Act, 1993 (Act 462).

  1. For purposes of construction, it provides that the burden is on the transferor to satisfy the transferee that the land is appropriately zoned for transferee’s purposes.
  2. It also places a mandatory requirement on the transferor to attach evidence of due zoning to the instrument of transfer.
  3. Any breach is an offence punishable by a fine or five to seven years’ imprisonment or both.
  4. The Acts also provides that an application for registration of title to land must be accompanied by a Land Use Certificate granted by the relevant District Assembly.

This is a very beautiful legislation but in practice, it is not happening.

  • National Building regulations, LI 1630, 1996

This regulation reinforces provisions earlier mentioned in the Local Governance Act 2016 (Act 936). The regulations provide pre-requisites for construction activities and establish standards for the erection, alteration or extension of buildings.

Among the pre-requisites provisions are:

            Submission of building plans in addition to application for building permits

  1. The application for building permits and submission of the building plans to the DPA.

Satisfaction of Good title

  1. Satisfying the DPA that the applicant has good title to the land relevant to the plans.

Certificate of demarcated corners.

  1. The Applicant shall also submit to the DPA a certificate signed by a Licensed Surveyor to the effect that the corners of the plot on which the building or work is to be carried out have been demarcated on the ground in a permanent manner in accordance with the site plan.

Qualification to design

  1. A building or group of buildings with an aggregate floor area in excess of 120 sq m. and of two storeys and above in height shall be designed by an architect or a civil engineer or structural engineer or professional builder (this description excludes draughtsman, licensed building surveyor and a building technician with a qualification lower than the higher technician diploma.)

Approval for use of unconventional building material or method

  1. A person intending to use methods or materials for which no provision has been made under the regulations shall apply in writing to the DPA with the details of the new method or materials for approval.

Notice of Commencement and scheme of work

  1. A developer who has been issued a building permit is required to give the DPA 48 hours notice in writing of the date he intends to start work as well as scheme or plan of work at specified stages/phases of completion.
  • Ghana Building Code GS 1207, 2018

This is a comprehensive building code stipulating minimum requirements for building except for one and two family houses less than 3 storeys with a separate means of escape. The code is benchmarked against green construction code and international building code to serve as reference standard for designers, regulators, safety instructors and other stakeholders in the building industry.

  • The code makes it unlawful for any construction or development works to be carried out in violation of the code. Where there is violation, the Head of works is to send a notice of violation or an order to stop work or abate the violation to the person responsible for the ongoing works at a site. (code 1.16.2)
  • If the notice is not complied with the Head of works is authorized to request legal counsel to institute an action to restrain, correct or abate the violation or to require the removal of the building or the termination of unlawful occupancy of the building or structure. Code1.16.3
  • The preamble to this document states as follows: “the Code is intended to be adopted as a legally enforceable document and it cannot be effective without adequate provisions for its administration and enforcement.”
  • Prospects for better implementation of the code will no doubt depend on the ability to overcome problems such as bureaucracy, corruption, inadequate building inspectors, political interference, lack of public education, etc.
  • Architects Act 1969 (Act 357)

The Act provides that a non-resident Architect cannot be registered to practice in Ghana except where special application is made for a temporary registration for the purpose of executing a specific project. This requirement is in addition to general work and resident permit.

  • Civil Liability Act 1963 (Act 176)

The Act makes provision for concurrent wrongs and contributory negligence. This is in addition to the general common law principles on torts and negligence. Under the Workmen’s Compensation Act 1987 (PNDCL 187), a Principal is entitled to be indemnified by a Contractor or subcontractor in respect of compensation paid by the Principal for any occupational injury or death to workmen engaged on a project.

  • Insurance Act 2006, Act 724

Section 183(1) of the Insurance Act 2006, Act 724 states that a person shall not construct or cause to be constructed a commercial building without insuring with a registered insurer the liability in respect of construction risks caused by negligence or the negligence of servants, agents or consultants which may result in bodily injury or loss of life to or damage to property of any workman on the site or of any member of the public. Subsection (2) states that a person who contravenes subsection (1) commits an offence.

  • Environmental Assessment Regulations, 1999

Schedule 1 of the regulations provide a number of undertakings including construction activities or related activities for which it is mandatory to obtain an environmental permit.

  • Public Procurement Act 2002, Act 663 as amended.

Section 60 of the Act mandates the Public Procurement Board to issue guidelines for implementing margins of preference for domestic Contractors and suppliers of goods, works and services. Domestic contractors also include locally incorporated entity owned by foreign nationals-this suggests that the focus is on the legal personality of the company rather than the individual’s nationality.

To be eligible for the margin of domestic preference under ICT for instance, the minimum criteria must be met:

Domestic Contractors:

  1. Are you registered and incorporated under the laws of Ghana
  2. Have a majority shareholding by Ghanaian
  3. Will not subcontract more than 50 percent of the total value of the works to foreign contractors.

For Joint Ventures

  1. The domestic partner will not qualify for the work on technical or financial grounds without the foreign partner’s participation
  2. The domestic partner demonstrates a beneficiary interest of not less than 30 percent in the joint venture as demonstrated by the profit and loss sharing provisions of the joint venture agreement

Subcontracting by Foreign Firms

  1. Foreign firms may be eligible for domestic preference if they undertake to subcontract 30 percent or more of the value of the works to a domestic contractor.

5.0      Critique

There is no doubt that there abounds enough legislation that ensures harmony between the environment, economic aspirations as well as spatial planning expectations.

There is however the need to address these legislative gaps identified:

  • There is no statutory requirement for licensing Contractors in Ghana. We have only a classification system that categorises contractors into classes based on the volume of work executed, expertise and experience and type of equipment used by contractors. A legislation in this regard will greatly enhance regulation in the sector.
  • Lack of an established dedicated regulatory body for the construction sector to ensure safety and increase professionalism in the industry. It could also serve as a watchdog for reported patronage during the awarding of government contracts. The government started exploring the establishment of a construction Industry development Authority in 2014, but not much significant progress has been made.

6.0      Public-Private Partnership Bill 2016

This bill seeks to establish a legal framework for the development, implementation and regulation of public private partnerships (PPP) arrangement and projects between public institutions and private entities for the provision of public infrastructure and services.

The bill proposes the establishment of the Ghana Partnership Agency to take up the responsibility of spearheading the development of PPP programs through the issuance of standardized PPP provisions, manuals and guidelines for the effective management of PPP projects.

Cardinal objective of the Bill is to encourage and promote local content in PPP projects. The Bill includes local content and technology as a guiding principle and mandates how it should be implemented. This may include the presentation of a local content plan to the contracting entity in response to a Request for Proposals (RFP) and demonstration of how the project may promote local industries such as scope of local employment, technology upgrade and transfer, skills upgrade and transfer as well as intellectual property transfer.

7.0      Conclusion

It is estimated that the country needs Gh30bn to bridge its infrastructure gap in areas such as roads, water, bridges, electricity, hospitals and sanitation. Government has entered into a number of transactions to bridge this gap. One major deal for this agenda is the US$2bn Sinohydro project for the financing of road projects, bridges, interchanges, hospitals, and rural electrification in exchange of refined bauxite.

On the housing front, the deficit stands at 2million houses valued at about US$3.4bn. On annual basis, the government will have to build 190,000 to 200,000 units of housing each year. Government has in recent times announced to set up US$1billion mortgage and housing finance to leverage private capital while providing affordable housing for every Ghanaian.

These developments present huge opportunities for lawyers to explore and develop core competences in construction law in order to make significant impact in this sector. The best point to begin is to have a good appreciation of the legal framework that regulates this sector, identify possible gaps for legislative development and leverage on them for recognition in order to make greater impact for professional development.

References:

  • 1992 Constitution of the Republic of Ghana
  • National Development Planning Commission Act 1994, (Act 479):
  • Local Governance Act, 2016 (Act 936)
  • Land Use and Spatial Planning Act 2016,( Act 925)
  • National Building regulations 1996, (LI 1630)
  • Ghana Building Code 2018 (GS1207)
  • Insurance Act 2006, (Act 724)
  • Architects Act 1969 (Act 357)
  • Civil Liability Act 1963 (Act 176)
  • Environmental Assessment Regulations, 1999
  • Public Procurement Act 2002,(Act 663)as amended.
  • com
  • Business News, 17th April 2019 edition.
  • ghana.gov.gh.