THE CONSTRUCTION SECTOR IS GEARING UP

After a decade of tough operating environments, SA is left with only a handful of listed builders to tackle the government’s infrastructure rollout.

- Brendan Peacock

Steps toward economic reform, greater accountability for public sector officials and intent to get the economy on track again appear to have gathered momentum in recent weeks. One of the beneficiaries potentially sitting in the sweet spot of all three factors is the construction industry, which has endured a torrid decade.

After the 2010 Fifa World Cup stadium and infrastructure projects, order books in South Africa began to shrink and an oversupplied construction sector was quickly pushed to find alternative options to fill existing capacity. As the decade rolled on, a combination of the downward part of the commodity cycle, a lack of African infrastructure spend, stalled Middle East projects and cut-throat competition for contracts pushed construction firms to the brink.

Some, like Group Five and Basil Read, ultimately capitulated and entered business rescue in the face of project contract fines and an industry-wide liquidity crunch. Listed sector representatives in which to invest dwindled to a few.

2021, by contrast, has offered glimmers of hope as roads agency Sanral begins opening the taps on road construction spend, mines move to re-engage in postponed maintenance work, and the government announced an unexpected increase in the nonlicensed private electricity generation cap to 100MW.