AfriSam awaits government infrastructure spending

The outlook for South Africa’s struggling construction industry remains uncertain, hovering between the massive infrastructure expenditure figures being publicly mooted and the state’s seeming inability to implement its economic recovery plans. 

Richard Tomes, sales and marketing executive at AfriSam, said: “Although the operating environment remains challenging, one of the positive elements AfriSam has noted is the increase in the infrastructure spend budget allocation, and we remain hopeful that the implementation of the infrastructure projects will gain momentum and start delivering true value for the construction industry.” 

Considerable overcapacity was still evident in the non-residential building sector, especially commercial office and retail space. The value of non-residential building plans passed averaged just about ZAR1bn (US$55.1m) in value compared to ZAR3bn in 2016. The brief recovery in the residential building sector, as homeowners renovated for home offices, had tailed off. Cement demand suffered negative growth in 2022, and was expected to improve only marginally over the next few years, he said. 

At this year’s AfriSam Budget Breakdown event, Econometrix economist, Dr Azar Jammine, pointed to raised expenditure targets for infrastructure. Dr Jammine said he was encouraged by the growth from ZAR812bn to ZAR903bn in the estimates for public sector infrastructure expenditure from the FY23-24 to FY25-26 financial years.  

“These numbers are so big that if we were to see their full implementation, it would be a game changer not only for the construction sector, but for the entire economy,” he said. “Where the real hope lies is in government getting its act together and starting to implement its capital projects.”