Building the post-Covid SA calls for greater vigour

South Africa’s construction sector is facing a prolonged downturn despite the government’s planned massive infrastructure expenditure programme that aims to stimulate the economy post Covid-19.

David Metelerkamp, senior economist at construction market intelligence firm Industry Insight, says the outlook for the construction sector remains dim although there is some hope for a marginal improvement in civil investment in the medium term.

The SA Forum of Civil Engineering Contractors (Safcec) is “cautiously optimistic” about the industry’s prospects and Master Builders South Africa (MBSA) is “optimistic” despite both organisations highlighting several problematic issues.

Metelerkamp is not optimistic about the government’s massive infrastructure expenditure programme. “As private sector sentiment continues to deteriorate and at record low levels, any recovery relies solely on the successful implementation of the government’s infrastructure programme,” he said.

Being realistic

“Realistically such implementation is unlikely to materialise in the short term, underlying our view that the local construction sector will continue to be hampered by negative growth in the medium term and as economic growth deteriorates so will the downturn in the industry simply be prolonged,” he added.

Metelerkamp is more positive about the announcement by the SA National Roads Agency (Sanral) that it is ready to implement construction projects valued at about R30 billion sometime in the current financial year.

He said the 50 projects identified and gazetted by the government as the next step in the implementation of South Africa’s infrastructure investment plan are already in the system of several local and provincial departments of government and municipality.

Metelerkamp said these projects are apparently ready for implementation, adding that the terms “shovel ready” or “bankable” do get the hopes up of industry stakeholders but believes this “is unwarranted”.

Dr Kgosientso Ramokgopa, Head of the Investment and Infrastructure Office in the Presidency, said at the unveiling of 50 strategic infrastructure projects in July that these “are projects that are shovel ready, so in the next three months we will be able to go into the ground … and ensure that we are able to stop the haemorrhaging of jobs in the economy”.