Construction Sector Overview

Building A Bright Future: Construction Rises in Vital Economic Role

By Raine St.Claire

South Africa’s construction sector is vital for the economy and for contributing significantly to the GDP. According to the Department of Statistics’ quarterly labour force survey for 2023 Q2 the industry added 128 000 jobs to contribute to the 0.3% decrease in the unemployment rate in the country.

Revitalised Rising Infrastructure Horizon

While the industry faces challenges, private investments signify a positive trend. The sector is experiencing growth with 26 mega projects valued at R235.3-billion, a new R5-billion smart city, and a strong focus on renewable energy is contributing to this expansion.

The energy sector stands out as a key player in these projects. major highlights including the R75-billion Green hydrogen plant at the Coega Special Economic Zone, the 5th and 6th rounds of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) at R34.3-billion and R12.1billion, and the R12-billion Seriti coal mine wind farm project.

The 524 000 sqm mixed-use Tshwane Salvokop precinct project, valued at R18-billion is expected to create at least 3 152 jobs during the first phase estimated for completion by the end 2025. The three-phase project of constructing four government buildings is estimated to generate a total of 80 000 jobs.

Employment In The Construction Sector 2023 Q2

• 1 304 000 - total people

• Formal - 804 000

• Informal - 496 000

• Men 1 151 000 000 (88% – up by 139,000)

• Women 154 000 (12% – down by 11 000)

• Gauteng - 27%

• Western Cape - 19%

• Eastern Cape - 11%

• KwaZulu Natal - 18%

• Limpopo - 11%

Public Sector Spending On Infrastructure Over The Next Three Years

• Total of R903-billion National departments R504.5-billion

• Provincial R209.8-billion

• Local Government R190.3-billion

• public-private partnerships R21.9-billion

• Public entities R124.4-billion

• State-owned companies R302.1-billion

• Municipalities R190.3-billion

  Infrastructure Spending Focus

• Transport and logistics R351.1-billion

• Water and sanitation R132.5-billion

• Roads R233.1-billion

• Water R121.3-billion

• Housing R45.9-billion

Government Infrastructure Priorities Across South Africa:

Water Sector

• > 11 projects – R115-billion

• > 20 000 construction jobs and 14 000 operational jobs

Transport and Logistics

• > 11 Projects worth R20-billion

• > 10 000 construction jobs

• > Six projects valued at R20-billion currently under construction

Digital Sector

• > South African National Space Agency’s R4.4-billion project

• > First phase completion expected 2025Q1

• > 10 000 jobs across three phases

Advancements, Challenges, and The Call For Empowering Women in Construction

According to the 2023 Sanlam Gauge Report the construction sector advanced to a level 2 contribution rating. Ownership rose significantly to 81.87%. Skills development 82.54% of the target for skills development. ESD improved to 79.17% and Socio Economic Development exceeded the target at 183%. Female ownership of 51% and above reached 34%, slightly below Cidb’s 40% target. At 84%, the management control pillar remains a persistent challenge, especially in senior and top management. The industry struggles to retain experienced staff, who frequently move to other sectors or emigrate.

Gender diversity remains a significant issue, with building sites continuing to be predominantly male, estimated at 99% of the workforce.

With new regulations allowing tenders from emerging and 51% or more black-owned companies, mandating a 30% subcontracting involvement for tenders exceeding R30-million, the Public Works Minister urges companies and contractors to empower women in construction through subcontracting, thereby supporting the growth of small to medium-sized contractors.

Sources: Stats SA | National Treasury | IOL | DPWI | Sanlam | Cdib