Construction World June 2023

COMMENT

Despite the obvious challenges that exist in the construction industry, the general consensus is that the industry is slowly rebuilding itself. This rebuilding is not only to recover the ground that was lost due to the COVID-19 pandemic, but also to get the industry on an upward trajectory after it experienced a R36b contraction during the last five years. A frimat’s Construction Index (ACI) for 2022 sketched an industry that was in a state of decline. After returning to 2019 levels, the index dipped to below the 1,3% decline in GDP in the fourth quarter of 2022. When one compares year-on-year results though, the ACI improved by 1,9% to outperform the local economy. The decline in 2022 hit the building sector especially hard and 94 construction companies closed down and forecasts are that 2023 will only be marginally better. Growth within the industry is expected to be between 3% and 5% (depending on what source one believes). The South African Construction Industry Report maintains that the industry will grow at 5% and the more realistic South African Construction Market Report forecasts growth to be 3% (over a four year period). The budget in February (for 2023/24) committed R157b to infrastructure. This combines with the R2,2t (according to Stats South Africa). Looking ahead there are many factors that play a dampening role

recovering with confidence levels reaching a six year high in the first quarter of this year.

infrastructure investment plan to paint a very positive picture. However, budgeting is wishful thinking on paper and only some of these projects will come to fruition. Even so, the industry is in for a more positive trajectory. Opportunity in a crisis The current energy crisis has forced government to make concessions around the roll-out of renewable energy projects. This includes the easing of red tape, a higher ceiling for private power generation, and an escalation of investment in renewables. Over the next 18 months, several large projects will come onstream. Despite these positives, general business confidence in South Africa is dwindling. In February, business confidence, according CEIC Data, reported a whopping 18,9% decline over the previous month. Loadshedding and SA’s grey listing by the Financial Action Task Force (FATF) and other downgrades by ratings agencies are behind growing negative sentiment. Ironically confidence in SA’s construction industry is slowly

Wilhelm du Plessis Editor

BEST PROJECTS download the entry form from our website. Entry is free. These awards have proved – over the last 22 years – that even in times of difficulty, the South African construction industry remains renowned for its excellence in planning and execution. TWENTY-SECOND BEST PROJECTS 2023 A reminder to enter Construction World’s Best Projects awards. Turn to page 20 for an overview and

2023

EDITOR & DEPUTY PUBLISHER Wilhelm du Plessis constr@crown.co.za ADVERTISING MANAGER Erna Oosthuizen ernao@crown.co.za LAYOUT & GRAPHIC ARTIST

PUBLISHER Karen Grant

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2 CONSTRUCTION WORLD JUNE 2023