SA construction sector looking up
Country registers 40 new projects in tough year
South Africa and Egypt recorded the most construction activity last year, a report by professional services firm Deloitte has found.
The study found that both countries registered 40 projects in a year ravished by Covid-19. However, in terms of projects value, Egypt far outstripped South Africa.
The north Africa country recorded a project value of $93.7-billion (R1.45-trillion), which makes up 23.5% of the continental value, while South Africa scored projects valued at $50.4-billion.
Deloitte’s 2020 edition of the Africa Construction Trends Report includes 385 projects with a total project value of $399-billion. At its core, the annual Africa Construction Trends Report tracks infrastructure and capital projects activity in Africa. The report contains continental, regional and sectoral trends and includes projects of more $50-million in value that have broken ground by June 1 each year
Mahendra Dedasaniya, Deloitte Africa infrastructure and capital projects leader, said infrastructure development has been proven to play a major role in improving output, economic growth and employment in the short term, and laying the foundation for productivity and growth in the long term.
“South Africa, where infrastructure investment as a share of gross domestic product has been 18% over the past few years, has introduced an economic reconstruction and recovery plan to promote job creation and improve economic growth, mainly through infrastructure investment and delivery in network industries,” he said.
“Several initiatives are already in place, with the country having introduced a state infrastructure fund, which is expected to provide financing worth R100-billion over a decade. While small in size, the fund is anticipated to ‘crowd in private sector finance and expertise to support infrastructure delivery’.”
South Africa’s construction industry has endured a torrid time since the massive 2010 World Cup infrastructure outlay ran dry. Some local construction companies have diversified into other sectors, while others have gone out of business or sold their local construction business. Construction companies under business rescue include Basil Read, Esor Construction and Group Five.
The government has outlined plans to fast-track infrastructure projects that are under construction and those already pre-approved. This will be overseen by an investment and infrastructure office in the Presidency, with an emphasis on planning, coordination and developing bankable pipeline opportunities.
Allocators of capital have welcomed the government’s proposal to open the way for local retirement funds to invest more in infrastructure locally and the rest of Africa. The Treasury’s proposed amendments to Regulation 28 of the Pension Funds Act will allow retirement funds to raise exposure to hedge funds and private equity and upping their infrastructure allocation to 45% of assets under management locally and 55% when including the rest of Africa.