It was a sombre tone at this year’s annual AfriSam budget breakdown event, but sales and marketing executive Richard Tomes reminded stakeholders that the company’s 90 years in business should be
inspiring because the construction sector remains so resilient. A regular contributor to the budget
breakdown, Econometrix chief economist Dr Azar Jammine, highlighted that the construction and building industries were still in the doldrums, with little sign of emerging from them soon. He pointed
to the low economic growth rate and the poor level of gross fixed capital formation as key culprits of the challenging milieu.

While President Cyril Ramaphosa’s budget speech contained a theoretical commitment by government to focus on infrastructure, there was not much to boost confidence. Jammine 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 by 40-45% over the past decade.

The slight recovery in residential building from 2020-2022, as a result of the Covid-19 pandemic, had faded. “This is horrific and there’s little sign of it recovering,” he said. “The big loser is in the commercial space, which has fallen by 80% in terms of plans passed.” Employment in the construction industry also continued to drop and is now 40% down from 2019 figures. The sector’s contribution to national employment is today only about 4,5%, having been over 6,5% in around 2017. “No other sector in the economy has been performing as badly,” said Jammine. This was also reflected in the retail sales at
builders’ merchants, which now ranked as the weakest segment of the retail sector.

He reiterated that crime was also a central factor in holding back progress in the construction industry and was encouraged by Business Leadership SA’s workstreams to work with government on energy, transport and crime. “I don’t need to remind members of this audience of the debilitating effect that
the construction mafia is having,” he said. “I only hope that government will listen to the private sector and involve it more in finding solutions.” With the “semigration” of many South African professionals to the Western Cape, he noted that this province had recently taken the lead over Gauteng in terms of
residential building plans passed. There