Confidence in construction sector hits an all-time low
FNB/BER said 90percent of respondents were dissatisfied with prevailing business conditions on weaker activity growth, which had weighed on profitability.
Siphamandla Mkhwanazi, a property economist at FNB, said the decline was supported by a slowdown in construction activity, and contractors should brace themselves for a continuation of the current weak demand.
“It’s not surprising that the prospects for work are downbeat given the state of the fiscus and the resultant reduction in infrastructure investment by the public sector. In addition, the spike in private sector construction work seen in the official numbers of late may not be sustainable,” said Mkhwanazi.
Finance Minister Tito Mboweni in his Budget Speech said the government was prioritising resources towards the president’s infrastructure fund and away from the wage bill.
The government’s plan includes accelerating R526billion worth of on-budget projects by bringing in the private sector and development finance institutions. In addition, the government will commit R100bn over the next decade towards infrastructure projects.
Construction companies have been on their knees since the 2010 infrastructure projects fizzled out.
Group Five, once an investor darling, this month filed for bankruptcy. Basil Read, Esor Construction and Liviero Group applied for business rescue last year.
Roy Mnisi, executive director of Master Builders, said the industry has continually engaged the government on the adverse impact of late/non-payment of contractors for work completed, but the matter remains unresolved.
“The decline has reached a very concerning level, so much that it is no longer a sectoral problem but a national crisis,” Mnisi said.