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Construction industry sees green shoots of growth off a low base - BER's Lemboe
South Africa's construction sector, long mired in stagnation and underperformance, is beginning to show green shoots of recovery off a low base,
South Africa's construction sector, long mired in stagnation and underperformance, is beginning to show green shoots of recovery off a low base, according to Craig Lemboe, the deputy director at the Bureau for economic Research (BER) speaking at Construction Industry Business Breakfast held on Wednesday.
While the industry remains well below pre-pandemic output levels and continues to suffer from weak capital investment and low business confidence, recent survey data suggests that "green shoots" may be taking root.
Lemboe said for most of last year, saw the non residential sector was starting to show a little bit more growth and more potential than the residential sector. However, this was from a more eroded base as it's 50% smaller than what than what it was 10 years ago.
"We also see from our civil contractors survey that activity, particularly among large contractors, is doing quite well. So there is this idea that we are starting to see some larger infrastructure projects to come on board, and that the contractors are starting to see this, both in terms of the current activity, but also in terms of the activity going forward," he said.
South Africa was starting to see some larger infrastructure projects to come on board.
Despite these promising indicators, Lemboe cautioned that systemic barriers persist. Long delays in municipal approvals, chronic late payments by public entities, and uncertainty around infrastructure funding continue to hamper sustained recovery.
The Western Cape province stood out as a bright spot, with above-average construction activity and stronger investor sentiment. Still, nationally, overall building sector confidence remains low, with 75% of residential builders expressing dissatisfaction with prevailing conditions.
Another positive to support growth ahead, was the Budget 3.0 announcement of R1.03 billion allocated for infrastructure. However, Lemboe said while it "is a welcome announcement, there are a number of caveats that we are very weary of at the BER."
A large chunk of this spend is being filtered through state-owned enterprises, but there isn't a lot of clarity on where the income is going to come from, where the capital is going to come from, in order to find these projects.
Also a portion of the funds comes through provinces and municipalities, and municipalities are known to be weak on capital expenditure.
Ramokgopa
Meanwhile, Minister in the Presidency for Planning, Monitoring and Evaluation, Maropene Ramokgopa, also speaking at the event, said South Africa is accelerating plans to transform the country into a "construction site" through a sweeping infrastructure drive that aims to tackle unemployment, stimulate inclusive growth, and reduce the high cost of living, .
Ramokgopa pointed to the government's Medium-Term Development Plan (MTDP) for 2024–2029, which commits to deliver n the established investment pipeline.
"Increasing public infrastructure spending requires stimulating private sector investment that will enable industrialisation and supporting job creating in the country," she said.
The government has committed over R943.8 billion to public infrastructure over the medium term, with a strong emphasis on crowding in private investment through public-private partnerships.
However, public infrastructure spending currently accounts for just 3.8% of GDP, well below the 10% target set.
Ramokgopa said South Africa's national development was linked to that of the African continent. "Infrastructure must drive regional integration, promote and support industrialisation across Africa as a region. We are advancing collaboration and partnership in accelerating regional infrastructure projects through an African Union's presidential infrastructure champion initiative," she said
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