Construction activity declines in the first quarter due to high rainfall in four provinces
Image: Leon Sadiki/Bloomberg
Construction industry activity in the first three declined due to high rainfall and no meaningful impact from the marginal drop in the prime overdraft rate since September, according to findings of the first quarter, Afrimat Construction Index (ACI).
The ACI is an index of the level of activity within the building and construction sectors, compiled by economist Dr Roelof Botha and commissioned by the mid-tier mining company that produces and supplies construction materials, iron ore, anthracite, phosphate, and industrial minerals, Afrimat.
The year-on–year comparison with the first quarter of last year in the ACI showed a decline of 2.6%. Dr Botha said he believes the reading is an accurate reflection of the government's lack of willingness to spend on economic assets.
'Following a sharp drop during the pandemic, the ACI recovered swiftly to within a whisker of its pre-COVID level, but the recovery was then stymied by inadequate fiscal support for infrastructure expansion and the hangover from the state capture era, where the effectiveness of key State-owned enterprises and public sector agencies was eroded. Over two years, these problems have been exacerbated by the South African Reserve Bank's restrictive monetary policy,' said Dr Botha.
He said the sector had been hamstrung ever since the high interest rates started to bite into the pockets of prospective home-owners and property developers, as indicated by the decline in the real value of building plans passed by the metros and larger municipalities. These had declined in Gauteng, Western Cape and KwaZulu-Natal (KZN) over three years.
He said in an interview interest rates were well above pre-Covid levels, a time when the government was already being criticized for an excessively stringent monetary policy.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Next
Stay
Close ✕
The value of construction activity by the public sector has fallen markedly since 2015, while the value of construction by the private sector has increased on slighltly since them.
Image: Afrimat
'Construction is the most labour intensive sector in the economy, and the restrictive monetary policy has not only prevented this sector from recovering from the pandemic but has also contributed to the sector entering a deep recession,' he said.
Above-average rainfall in some provinces in the first quarter also severely impacted construction activity. KZN had a noticeable increase over its historical average, Gauteng experienced above-average rainfall, particularly in January, while the North West saw a notable increase compared to its historical average.
The high rainfall was a major factor to the decline of some of the indicators in the ACI, with only two indicators showing growth. Employment in construction was up 2.1% year-on-year and hardware retail trade up 0.2% on the same basis.
High rainfall in some provinces and a continuing high interest rate contributed to a decline in construction activity in the first quarter on a year-on-year comparison basis.
Image: Afrimat
Dr Botha said the value of annual construction activity by state-owned enterprises had dropped by 61% since 2015, while the percentage decline for all government departments including municipalities for the same period came to 45%.
He said the roadmap for higher and sustained economic growth in South Africa recently published by the World Bank at the request of the government, provided an opportunity to eliminate some of the impediments to a revival of the construction sector, especially in enhancing decision-making in relevant public sector agencies.
Afrimat CEO Andries van Heerden said they were happy that their experience stood in contrast to the ACI's findings, in that both the group's cement kilns were running, and market demand was significantly stronger than originally anticipated.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
3 hours ago
- IOL News
Zoleka Lisa on steering SAB through booze bans while driving impact and growth
Zoleka Lisa, Vice President, Corporate Affairs, South African Breweries (SAB). Image: Supplied Zoleka Lisa is VP of Corporate Affairs at South African Breweries (SAB), where she oversees public policy, communications, stakeholder relations, entrepreneurship, and social impact. She moved from a senior role at Accenture into the alcohol industry to influence economic development and social initiatives on a national scale. Lisa has led SAB through major challenges, including complex COVID-19 alcohol bans, and is committed to mentoring emerging leaders, promoting responsible business, and driving inclusive growth across South Africa. What first inspired you to do what you do – and what was the moment that changed everything for you? My journey has always been fueled by curiosity, a relentless desire to understand the forces shaping our world and society. Growing up in a home that prioritised education, resilience, empathy, and purpose, I learned early on the value of discipline and kindness from my parents and grandmother. While I didn't have a specific dream career in mind, these values laid the foundation for my leadership journey. The pivotal moment came when I transitioned from a senior role at Accenture to the South African Breweries. That leap from management consulting to an industry that touches everyday lives enabled me to directly influence economic development, entrepreneurship, and social impact on a large scale, giving my work deeper meaning. What's the biggest challenge you've faced on your journey, and how did you push through it? One of the most critical challenges was navigating the COVID-19 pandemic shortly after being promoted to Vice President of Corporate Affairs. We faced complex alcohol bans that threatened the sustainability of our entire value chain, impacting livelihoods across the industry. Balancing government policy objectives with protecting workers and entrepreneurs required immense resilience, strategic dialogue, and collaboration. I could have stepped back, but instead I leaned into tenacity, surrounding myself with strong leaders and mentors to guide us through. That experience reinforced the importance of perseverance, agility, and compassionate leadership in crisis. What achievement are you most proud of, the one that still makes you smile when you think about it? I am deeply proud of leading a passionate team of change agents who are transforming how the industry engages with society. Together, we have driven impactful initiatives that uplift communities, promote responsible consumption, and foster entrepreneurship. Equally rewarding is mentoring emerging leaders—especially women—who have found their voices, seized opportunities, and gone on to lead with confidence. Seeing those individuals thrive and make their mark is a source of great joy and pride for me. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading What makes your role or career path different or special in South Africa? My role sits at the intersection of business growth, social impact, and national development, a unique vantage point in South Africa's complex landscape. As Vice President at SAB, I oversee public policy, communications, stakeholder relations, entrepreneurship, and social impact portfolios, which are central to how we build meaningful, responsible relationships with society. This position enables me to influence policies that support local industries, embed shared values into our growth, and contribute to transformative initiatives that resonate beyond business metrics. Serving on industry and community boards allows me to champion change that benefits the broader South African economy and society. How do you think the work you do is making a difference – whether in your industry, your community, or for other women? I believe in creating opportunities where people, especially women and youth, can flourish and thrive. Through SAB and the SAB Foundation, we invest in agriculture, entrepreneurship, and social upliftment to ensure inclusive growth. This work is about more than business; it's about empowering communities and nurturing leaders who will shape South Africa's future. I am deeply inspired by the resilience and tenacity of women who overcome adversity daily, and mentoring them to find their leadership voices is one of the most fulfilling parts of my role. What's the one piece of advice you'd give to a young woman who dreams of following a similar path? Make yourself proud. In large organisations, it's easy to get lost trying to please everyone or meet endless expectations. Instead, focus on your own goals, build a clear career plan, and identify supporters and sponsors who believe in your potential. Lean into that network and, most importantly, show up for yourself every day, through your work, your learning, and your leadership. Your journey is yours to own, and success is measured by how true you stay to your values and ambitions. Who's been the biggest influence or mentor in your career? My greatest influences have been my family, especially my parents and grandmother, who taught me discipline, resilience, and the power of education. They provided the emotional and moral compass that guides me today. Beyond family, I find inspiration in African changemakers, many of whom are not public figures but community leaders demonstrating unwavering commitment to development, women's empowerment, and social justice. Their courage and values constantly motivate me to lead with purpose. What's one myth about your job or industry you'd love to clear up? Many assume the alcohol industry only fuels irresponsible drinking or that our work is all about parties. In reality, we invest heavily in educating consumers about moderation and responsibility because lives and livelihoods depend on it. Like any business, our days are filled with deadlines, strategic planning, public policy engagement, and financial analysis to ensure our impact is meaningful and lasting. If you could give yourself one piece of advice, what would it be? Trust your own voice and show up for yourself and your team unapologetically. Finding my authentic voice and leadership style has been a journey of embracing all parts of myself, whether it's being a supermom at home, a dedicated leader at work, or showing up with my all-stars, my blue (and sometimes blonde) hair in boardrooms. Through this authenticity, I've created a space where diverse voices are genuinely heard and valued. Leadership isn't about fitting into a mould; it's about leaning into your strengths, committing to continuous learning, and fostering environments that empower others to do the same. When leaders show up unapologetically, being self-aware and embracing their unique journeys, they inspire confidence and courage, not only in themselves but in everyone around them, building stronger, more inclusive teams and communities. When you think back to the subjects you chose in high school or what you studied afterwards, did you ever imagine you'd end up where you are today – and how did that journey unfold? I often laugh and say I was definitely more of a nerdy 'thank you, professor' type than someone who was cool, but deeply curious about how the world worked and why. When I went to university, I studied Environmental Science and Economics, fields that gave me a broad perspective on how complex systems operate. Early in my career, I focused heavily on strategy and consulting, working with top global companies like Accenture. That foundation in problem-solving and business acumen has been invaluable. Now, as Head of Corporate Affairs for South African Breweries, I truly feel I've come full circle in my journey. Along the way, I pursued executive development programs at the London School of Economics and Stanford, which sharpened my strategic thinking and leadership skills. Today, I'm able to apply everything I'm passionate about, strategy, socio-economic insight, and geopolitical understanding, to work that is both meaningful and impactful. This blend of experiences, combined with deeply held values, has shaped me not just as a leader but also as a mother and a person. It's a journey I hope to continue paying forward by mentoring others and contributing to the growth of the next generation of leaders. IOL
The Citizen
9 hours ago
- The Citizen
Responses to US tariff increases may trigger closer tax scrutiny
Graphene Economics says even Mauritius is looking into intra-group transactions more closely. Global crises – such as the 2008 financial crisis, the Covid-19 pandemic, and the recent international trade tensions created by US President Donald Trump – generally result in renewed focus on tax collection, particularly from multinational companies. Tax authorities will take a closer look at companies' transfer pricing policies and whether prices are being adjusted because of outside shocks, or whether the tariff increases are a convenient opportunity to shift profits to head office countries, warns Michael Hewson, director at Graphene Economics. Transfer pricing is the price set when different parts of the same company, like its branches or subsidiaries, buy and sell things from each other – whether it is products, services, or ideas. Transfer pricing policies influence how much tax a company pays in the countries where it operate. ALSO READ: US tariffs: SA sends new proposal but no changes to laws Reduced prices Hewson says companies may react to the punitive tariffs introduced by the US by reducing the price of goods they export to the US in order to remain competitive. The risk is that they will lose market share if they do not make price adjustments to respond to the increased tariffs. This, says Hewson, may attract the attention of revenue authorities. 'The South African Revenue Service [Sars] may challenge why prices to a related party in the US are now lower than prices to third parties in other countries,' he explains. Hewson gives the example of a local manufacturer. If a global retailer, which manufacturers in China and other markets affected by high tariffs, sells more into SA, the demand for the local manufacturer's products may reduce. Especially if the prices charged by the global retailer reduce. This would impact the profitability of the local manufacturer. 'These reduced profits may cause Sars to ask whether the lower profits are due to its transfer pricing policy, even though it's actually impacted by external commercial factors.' ALSO READ: US tariff an existential threat for a third of metals and engineering sector Commercial rational Companies need to carefully record their decisions for making pricing adjustments, along with the commercial rationale behind them. When a dispute arises, it may be years after the actual event, and it can be quite a challenge to find the right documentation – or even people who were involved in the decision-making at the time. Hewson says Graphene Economics is increasingly receiving transfer pricing queries from countries it had not previously heard from. It has seen a notable increased focus on transfer pricing policies from East and West Africa. 'Governments are seeing transfer pricing as a big opportunity for revenue collections and the global shocks are proliferating the attention.' The work done by institutions such as the African Tax Administration Forum (Ataf), the Organisation for Economic Cooperation and Development (OECD), the United Nations, and the World Bank have assisted with capacity building, training, and the introduction of transfer pricing legislation into Africa. There has also been increased information sharing between Sars and revenue authorities in East Africa and West Africa. Mauritius, too, has recently been scrutinising intra-group transactions more closely and the number of audits has increased – something that has been unheard of in the recent past, notes Hewson. ALSO READ: Transfer pricing: 'Days of pleading ignorance are over' Reducing risk and costs Important tools to mitigate disputes with tax authorities include advanced pricing agreements (APAs) and mutual agreement procedures (MAPs). Hewson says there are several companies in SA that are keen to enter into APAs with the tax authorities. The main aim of an APA is to establish how prices will be set for future transactions, thereby reducing the risk of disputes following an audit, and the possibility of double taxation. Draft legislation for a proposed APA Programme was introduced in 2023 and according to ENSafrica, the draft bill included a clause indicating that a chapter on the APA programme will be inserted into the Income Tax Act. 'The introduction of the APA programme is a positive and significant development in South Africa's efforts to enhance its tax administration system. It provides taxpayers with an alternative, binding arrangement with Sars, and it will also offer upfront certainty on transfer pricing positions for a defined period,' the firm said at the time. Hewson notes that companies generally do not care where their profits are taxed, but they want to avoid double taxation. Several countries in Africa are using APAs. MAPs, on the other hand, offer a safety net when double taxation has already occurred due to tax authorities taking different positions. The key differences between APAs and MAPs Source: Microsoft Co-Pilot This article was republished from Moneyweb. Read the original here.
IOL News
a day ago
- IOL News
Private island off the coast of Wales hits the market for £3 million
Thorne Island. Image: Piers Cunliffe/Bloomberg Sarah Rappaport Thorne, a 2.5-acre private island off the coast of Pembrokeshire in South West Wales, has hit the market for £3 million with Strutt & Parker. The Victorian-era fort was built as defensive outpost for the naval base of Milford Haven and is accessibly only by boat or helipad. It's been fully renovated, and the 8,119 square feet of space includes five bedrooms and a rooftop bar. Thorne Island is completely self-sufficient with generators, solar panels and heat pumps. The coastal landmark is currently owned by tech entrepreneur Mike Conner, formerly the chief executive officer of Appsbroker. He bought the island in 2017 after seeing a video about it on YouTube. It was derelict then, but he saw its potential as a project, and he was up for a challenge. 'I feel like if you're sat in the office, sometimes you need something that's stimulating outside your family and friends,' says Conner of his purchase of the fort. 'Thorne's been a great stress reliever.' Connor gushes about the boyhood sense of wonder he gleans from a trip to his Island compound. 'I see it as a really expensive train set,' he says. 'It's just somewhere to go on boats and play with a crane and generators and fix stuff.' Conner adds that he's also had great parties on the island, including one memorable event where 80 guests spent the night. 'It's such a different environment. No one is looking at their phones, and everyone's very excited by the boats and being here,' Conner says. 'So even though it's only around 300 meters from the land, it feels like you're in a different country.' The main entrance is through the historic gates, into a hall with an open-plan reception, dining and sitting room with exposed brickwork. The bedrooms are spaced around the outer walls of the fort and feature panoramic views of the Pembrokeshire coastline. Conner recalls days spent working from the office he created for himself on the island and watching peregrine falcons fly by and lobster fishermen sailing past his window. 'It's just such a nice contrast to working from home and looking out the window to a street for your view.' He says he's put the island on the market now because his family just doesn't get out to Thorne enough. 'We've got quite a nice yacht in Croatia, and my kids are 22, 19 and 14, and they prefer to boat around the Med on the yacht rather than go to Wales.' Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Transforming Thorne Island The fort that dominates the island was built in the 1850s, during a period of British concern about the strength of the French navy; it could house around 100 soldiers. Its necessity as a military outpost faded with time, and the government sold it off in 1932 and it was converted to a hotel before it was left to decline. Conner says when he bought it, the fort was in rough shape and needed major investment. He spent about £2 million pounds on the purchase and renovation work. The fort was waterlogged and had no electricity when Conner purchased it. 'It was the most viewed property on Rightmove that year, and it was derelict,' he says. 'The thought of restoring a building and figuring out how all this new technology-like reverse osmosis for the water supply-would work with what the Victorians had done already, just really appealed to me,' he says. For four years during the renovation, a construction crew lived on the original barracks on the island and went back to the mainland in rotating shifts. Boats weren't enough to get the necessary supplies in, Connor says, so there was 'an awesome two days of heli-lifting,' during which essential materials for the renovation work were airlifted to the island. 'We had eight people on the island and eight on the mainland just hooking up different loads to the helicopters and going back and forth,' he says. 'It was truly an epic endeavor.' The construction crew also installed a 10-meter (33-foot) crane with its own engine to help with the process. Conner says the nature of the island made some aspects of the build particularly complicated. 'Because you've got an 8-meter tidal range outside the island, you can't leave boats. You have to lift them out of the water. If the tide's going out, they'll be left hanging by a rope,' he says. 'So there's just a whole lot of things we had to do to make the build viable.' Ensuring the fort could function off the power grid-sustainably-was also a challenge, he says, including the process of installing a biodigester to process waste.
