Building growth prospects ‘poor’

The South African construction industry is set to emerge from recession in 2019 but growth will remain tepid at 2.4%, Fitch Solutions says.

The sluggish growth in SA spells more troubles for struggling construction and building companies in the country, the research firm said.

This is likely to delay the turnaround of cash-strapped construction firms like Aveng, Basil Read and Group Five, whose fortunes largely depend on the construction industry’s recovery.

The domestic industry will drag down the performance of the construction industry in Southern Africa compared with other Sub-Saharan African regions, Fitch said.

In its 2019 Sub-Saharan Africa construction growth outlook, Fitch said it expected the construction industry in the region to grow by 6.8% year on year, “which will continue over the medium term as investment flows into the region in order to meet pressing infrastructure needs”.

Ethiopia will remain the region’s top performer, with its construction industry value likely to increase 12.3%.

But construction in Zambia was likely to contract 2.3% in 2019 as the government faces a fiscal crisis and rising risk of debt distress.

“In Namibia, the completion of new container and liquid bulk terminals at Walvis Bay will cause the sector to contract 3.5% as there is a lack of new projects,” Fitch said. –