Industry’s post-pandemic recovery remains muted

The construction sector has not had an easy time in recent years as a result of slow economic growth and declining spend on infrastructure.

The Covid-19 pandemic exacerbated the sector’s challenges with a further decline in construction activity in the second quarter of 2020.

Although the sector did start showing signs of a healthy recovery after the pandemic-induced slump increasing by a huge 74% in just two quarters, that recovery has now slowed, according to the Afrimat Construction Index, a composite index of the level of activity in the construction and building sectors. According to the index, the sector saw a 0.8% year-onyear improvement in the fourth quarter of 2021, compared to the same quarter in 2019.

Muted growth in the construction and building sectors has primarily been attributed to the slow rollout of government’s infrastructure programme and a slowdown in commercial building.

OBSTACLES

Economist Dr Roelof Botha, who is responsible for compiling the index on behalf of Afrimat, says continued delays in finalising public sector contracts for construction tenders is a concern. He adds that the repair and expansion of SA’s infrastructure will continue to be stalled unless government makes good on its promises to remove unnecessary bureaucratic obstacles facing the private sector.

SA’s construction sector, says Botha, stands to benefit from the increased infrastructure expenditure earmarked for the 2022 and 2023 fiscal year. He warns, however, that the war in Ukraine will continue to put pressure on domestic inflation while an absence of excessive demand will weigh on the sector’s recovery.