AfriSam recently gathered its stakeholders for its Annual Budget Breakdown event in Johannesburg, to hear insights on the construction sector and budget speech.
Econometrix Chief Economist, Dr Azar Jammine, highlighted that the South African construction and building industries were still in the doldrums, with little sign of emerging from it soon. Dr Jammine pointed to the low economic growth rate and the poor level of gross fixed capital formation as the key culprits for the situation. While the Budget Speech contained a theoretical commitment by government to focus on infrastructure, there was not much to boost confidence.
He noted that private sector capital investment in South Africa had shown some improvement, but this was mainly in machinery and equipment. Investment in construction – including civil engineering – and building had declined 40 to 45 per cent over the past decade. The slight recovery in residential building between 2020 and 2022, as a result of the COVID-19 pandemic, had faded.
Employment in the construction industry also continued to drop, and is now 40 per cent down from 2019 figures. The sector’s contribution to national employment is today only about 4.5 per cent, having been over 6.5 per cent around 2017.
“No other sector in the economy has been performing as badly,” he said. This was also reflected in the retail sales at builders’ merchants, which now ranked as the weakest segment of the retail sector.
According to Richard Tomes, AfriSam sales and marketing executive, the insights from Dr Jammine confirmed that the construction industry will remain under pressure for some time.
Econometrix Chief Economist, Dr Azar Jammine, speaking at AfriSam’s
Annual Budget Breakdown event in Johannesburg
