Engineering and Infrastructure Sector Overview

SA Sees Rise In Construction Activity

By Sinazo Mkoko

In his State of the Nation Address (SONA) in February this year, His Excellency President Cyril Ramaphosa said one of the greatest obstacles to infrastructure investment was the lack of technical skills and project management capacity. To fix this, he shared that Infrastructure South Africa has been allocated R600-million for project preparation, specifically in rural and under-resourced areas.

His Excellency President Ramaphosa said that the support and planning mechanisms that the government had put in place over several years were now starting to bear fruit in increased public investment in infrastructure. “By January this year, projects worth R232billion were under construction, and projects worth nearly R4-billion had been completed. The completed projects include new human settlements in Gauteng, road upgrades, and the development of small harbours,” said President Cyril Ramaphosa.

In road development, President Cyril Ramaphosa said the South African National Roads Agency (SANRAL) has awarded road construction contracts worth R18-billion between November 2022 and January 2023. “The construction of the Msikaba Bridge and Mtentu Bridge will be finished and make travel in the Eastern Cape much better.”

He added that 24 bridges in KwaZulu-Natal were currently under construction, and site preparations were being made for a further 24 bridges. The Minister of Public Works and Infrastructure, Sihle Zikalala, said South Africa has a strong core network of national economic infrastructure, yet investment in infrastructure has lagged over the past ten years.

In addition to reviving the construction sector, a significant infrastructure push will support local manufacturing and other related sectors across the value chain. “As the Department, we welcome the postCOVID-19 improvement in property investment in the country, which has improved from almost R2.8-trillion post-COVID-19 for the residential industry to R6.7-trillion.” Hon. Zikalala.

Implementation of Strategic Infrastructure Projects in The Country

The Department of Public Works and Infrastructure confirmed that since the announcement of the infrastructure projects in 2020, some great strides can be reported, with a number of projects completed to the value of approximately R4.63-billion.

“Projects completed were mostly covered within the Transport (including the Small Harbours in the Western Cape) and Social Housing Programmes.” Five out of twelve SANRAL gazetted projects and four social housing projects were completed,” the department said.

A Further Four Projects are Expected to be Completed Within This Financial Year:

• Hull Street Social Housing Project Phase 1: Social Housing Project in the Northern Cape (Under SIP 24: Human Settlements)

• Newcastle Hospital Street Social Housing Project (500 units out of 1056 completed) Social Housing Project in KZN (under SIP 24: Human Settlements)

• Scatec Kenhardt 1,2,3 -Renewable energy project in Northern Cape (Under SIP 20a RMIPPP)

• Sefako Makgatho Health Sciences University Student Accommodation in Gauteng (Under SIP 34: Student Accommodation)

The department said the total investment value of the above-mentioned projects to be completed is estimated to be around R17.5-billion.

To Unblock and Address the Challenges of Stalled Projects, the Following Measures Are In Place:

• All delayed projects and their challenges have been identified, and intervention measures with clear action plans with start and finish dates have been put in place, followed by strong monitoring mechanisms for implementation targeting various role players up to management level.

• A turnkey implementation methodology has been adopted to implement projects and will save longer duration periods associated with planning, design, and procurement.

• The close monitoring of projects will be enhanced by the establishment of the outsourced programme management units that we are in the process of establishing.

The FNB/BER Civil Confidence Index has revealed that civil construction work increased significantly in the second quarter of 2023, building on the improvement registered since mid-2022.

A Senior Economist at FNB, Siphamandla Mkhwanazi, said the index measuring activity growth was at its highest since 2007.

“We’ve been cautiously optimistic about the rise in construction activity over the past few quarters. The latest results provide an even stronger signal that civil contractors are noticeably busier than they have been in a while. Part of this is due to increased public sector projects related to road and water infrastructure. Crucially, the development of alternative energy infrastructure by the private sector seems to be providing the bulk of the boost,” he said.

Sources: SA Gov | Public Works | The FNB/GER Civil Confidence Index | Stats SA | Trading Economics