How to revive SA’s construction sector post COVID-19

The construction sector in South Africa has been facing significant challenges, with the Afrimat Construction Index showing depressed levels of construction activity in the first half of this year. However, there is hope for a recovery on the horizon as the economy slowly reopens. Geoff Nolting, an economist at FNB, and John Matthews, the president of Master Builders South Africa, discussed the potential drivers and obstacles to this recovery in a recent interview on CNBC Africa. John Matthews expressed the urgent need for both the private and public sectors to play a significant role in unlocking the economy. He emphasized the importance of timely action, citing delays in infrastructure projects and funding as major concerns. With the sector already facing a 2% contraction before COVID-19, the current situation could worsen if proper measures are not taken promptly. Geoff Nolting highlighted the impact of the lockdown on small contractors, many of whom have struggled to operate during this period. The sector, which accounts for about 3% of GDP and employs 1.3 million people, saw a significant job loss of 7,000 in the first quarter of 2020. This underscores the need for swift action to prevent further decline. One of the key challenges facing the construction sector is cash flow, particularly for smaller players. The collapse of major construction companies like Group Five and Basil Read prior to the pandemic has added to the industry's woes. John Matthews stressed the importance of financial support and urged banks to ease lending practices to facilitate project funding. Despite the gloomy outlook, there is a glimmer of hope in the form of increased focus on infrastructure development as part of the post-COVID-19 economic recovery plan. President Cyril Ramaphosa recently hosted the Sustainable Infrastructure Development Symposium, aiming to boost engagement between the public and private sectors in project implementation. With 276 projects worth 2.3 trillion rand under evaluation, the construction industry could see a much-needed boost if these projects come to fruition. However, the history of unfulfilled promises in infrastructure delivery raises skepticism. Geoff Nolting pointed out that confidence in the sector will only improve once tender activity and awards start increasing. While private sector funding could help bridge the gap left by constrained public finances, concrete action is needed to translate plans into tangible outcomes. The road to recovery for South Africa's construction sector is fraught with challenges, but with concerted efforts from all stakeholders and a proactive approach to funding and project implementation, the industry could see a revival in the post-pandemic landscape.