CONSTRUCTION SECTOR
C O N ST R U CT I O N S E CTO R OV E RV I E W BY FIONA WAKELIN A key development objective, as set out by the National Development Plan, is that public infrastructure investment should be 10% of GDP by the year 2030. The road to achieving this is currently a rocky one. Infrastructure development is one of the key sectors that
it is mandatory to employ 30% of the community, but the
focus area for the National Development Plan. So what is
clearly make no difference to the extortionists, and an
contributes to the national GDP and was identified as a happening? Why the slump?
Key challenges for the construction industry Include: • Stagnant economy – exacerbated by the COVID-19 • South Africa’s sovereign credit rating • Outstanding payments for construction work completed • Intimidation by the construction mafia Billions of rands have been lost in the construction industry due to extortion by so-called “business
forums”. The South African investigative journalism
television series that airs on M-Net during prime time viewing on Sunday nights, Carte Blanche, reported that large projects like the N2 Wild Coast Road
(value R1.65-billion) and Saldanha Bay Oil Storage
(value R2.4-billion) have had to be put on hold due to extortion and thuggery – what President Ramaphosa terms “radical economic robbery”.
The already beleaguered construction industry is being held to ransom by groups of organised members (read
mafia) who arrive, belligerent and armed at construction sites and demand to be paid for not destroying the work done, or closing down the sites because they had not
been employed. For public sector construction projects,
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TOP PERFORMING COMPANIES | 18TH EDITION
private sector has no such obligation. These distinctions already struggling industry, a key contributor to the
economy, requires immediate intervention to rid itself of these opportunists.
After a contraction of 20.3% in 2020 and 4 consecutive years of decline in real terms, the South African
construction industry is expected to grow by 6.2% in real terms in 2021 - although this must be seen as relative to previous years. The sector was particularly hard hit by the pandemic.
“To revive the economy from crisis, the government
announced plans to provide ZAR791.2 billion (US$45.3
billion) of investment for infrastructure development in the 2021 Budget, which includes the repair and replacement of the existing dam, bridge and railway line, the
development of the housing, energy, agriculture, transport, water and sanitation and digital infrastructure sectors.
“The industry is expected to register an annual average growth of 3.4% between 2022-2025, as government
initiatives to ramp up capital spending on infrastructure and energy sector gather momentum. The government expects the country’s public debt to rise from 63.3% of
GDP in 2020 to 81.8% by 2021, and further increase to 93.5% by 2026.” - Businesswire
