Cape Town - South Africa suffered its worst decline in economic activity in a decade, in the first quarter of 2019 and one of the sectors contributing to this decline is the construction industry, witnessed by some long-established industry-stalwarts and household names being liquidated or placed in business rescue.
The worrying figures posted after the 1st quarter’s economic activity data released in May, do not paint an encouraging picture at this moment, particularly with regard to the construction sector.
The construction industry has added to the country’s unemployment woes, by shedding some 142,000 jobs between the 4th quarter of 2018 and the 1st quarter of this year.
Executive Director of the Master Builders’ Association, Western Cape (MBAWC), Allen Bodill, said despite these challenges, a concerted effort by both government and the private sector could turn the industry around.
"Obviously we are very concerned about the number of liquidations and business rescues we are seeing in the industry. Our own members are also acutely affected by the prevailing difficult circumstances," he said.
A general dearth in government spending and infrastructure projects, coupled with political uncertainty and its resultant effect on investor confidence, has seen many industry players of all sizes, being brought to their knees. In terms of government spend, in his recent State of the Nation Address (SONA), President Cyril Ramaphosa said the government would be taking a new approach to construction.
"It includes a special package of financial and institutional measures to boost construction and prioritise water infrastructure, roads and student accommodation through a more efficient use of budgeted money. As announced at the previous SONA, government has set aside R100bn to seed the Infrastructure Fund," Ramaphosa said, adding that he was working towards the fund being managed by the Development Bank of Southern Africa.
While this is good news, says Bodill, and should be applauded, it is important that the fund is managed in a way that ensures its purpose is fulfilled.
"We welcome the government’s commitment to the Infrastructure Fund. A lot of money is purportedly going to be spent on housing in the Western Cape. This would provide a much-needed boost for the industry and also create much-needed employment in our region," Bodill said.