The Economic Benefit of The South African Construction Industry in 2014 (Part 2 of 3)
Posted by MDA Projects on Wednesday, February 19, 2014 with 3 comments
Investment growth in the construction industry, particularly if the NDP is poorly managed, is expected to remain muted. Growth is expected to moderate from an estimated 3,2% in 2013, and 1,9% in 2013 to a probable improvement between 3% and 4% in the next couple of years. This projected improvement is supported mainly by an encouraging recovery in the property and commercial markets.
By contrast, investment growth in the civil sector is highly sensitive to government spending and, based on the 2013/2014 budget, is not expected to increase in real terms.
Opportunities for medium sized contractors
According to Databuild reduced demand in the mining sector will dampen private sector investment in civil works. However, while the larger contractors are seeking opportunities in Africa and elsewhere, medium sized contractors will be ideally placed to maximize domestic opportunities. The one area of major works where a highly skilled workforce will be required is in the proposed nuclear power station rollout. If Government is fully prepared, the project should commence in 2014.
Sector recovery and Government expenditure
The RMB/Morgan Stanley report of January 2013 also predicts no real growth in the construction sector for 2014. However, the report indicates an expected increase in fixed investment in 2015 driven by Eskom, Transnet and SANRAL projects. They are also firm in their view that sector recovery is heavily reliant on government infrastructure expenditure. On a more positive note, the RMB/Stanley report of February 2013 suggests that required government expenditure would be driven by supply and demand imbalances. The poor provision of electricity and water in particular has become a critical issue for Government.
Construction industry’s current employment contribution
In spite of the challenges, the construction industry’s economic contribution to GDP stands at 8,7% for 2013, with the same 8,7% forecast for 2014. According to Industry Insight, there were approximately 483 651 people employed in the South African construction industry in 2011. Of these, 35% were employed in civil works. At present, construction contributes a significant 8% of total employment across all work sectors countrywide.
More significant opportunities for job creation
What’s more, since this sector will require goods and services from other sectors, another 1 397 jobs could be created. The direct, overall impact means a possible 3 377 jobs with another 1 590 jobs indirectly supported; the affected sectors supplying the building and construction sector will have to increase their outputs. With this in mind, and considering the planned R3,2 trillion allocated for future investment in the South African building and construction sector, there are potentially even more significant opportunities for job creation. Translated, this means future Government expenditure of almost 30% of GDP by 2030.
Part 1 of 3
Opportunities for medium sized contractors
According to Databuild reduced demand in the mining sector will dampen private sector investment in civil works. However, while the larger contractors are seeking opportunities in Africa and elsewhere, medium sized contractors will be ideally placed to maximize domestic opportunities. The one area of major works where a highly skilled workforce will be required is in the proposed nuclear power station rollout. If Government is fully prepared, the project should commence in 2014.Sector recovery and Government expenditure
The RMB/Morgan Stanley report of January 2013 also predicts no real growth in the construction sector for 2014. However, the report indicates an expected increase in fixed investment in 2015 driven by Eskom, Transnet and SANRAL projects. They are also firm in their view that sector recovery is heavily reliant on government infrastructure expenditure. On a more positive note, the RMB/Stanley report of February 2013 suggests that required government expenditure would be driven by supply and demand imbalances. The poor provision of electricity and water in particular has become a critical issue for Government.
Construction industry’s current employment contribution
In spite of the challenges, the construction industry’s economic contribution to GDP stands at 8,7% for 2013, with the same 8,7% forecast for 2014. According to Industry Insight, there were approximately 483 651 people employed in the South African construction industry in 2011. Of these, 35% were employed in civil works. At present, construction contributes a significant 8% of total employment across all work sectors countrywide.
More significant opportunities for job creation
What’s more, since this sector will require goods and services from other sectors, another 1 397 jobs could be created. The direct, overall impact means a possible 3 377 jobs with another 1 590 jobs indirectly supported; the affected sectors supplying the building and construction sector will have to increase their outputs. With this in mind, and considering the planned R3,2 trillion allocated for future investment in the South African building and construction sector, there are potentially even more significant opportunities for job creation. Translated, this means future Government expenditure of almost 30% of GDP by 2030.
Part 1 of 3
This comment has been removed by a blog administrator.
ReplyDeleteAfrica Government projects
ReplyDeleteThe Local Africa Government projects agency. With a huge database of public tenders information, we act as lead generation portal for companies who wish to get an African government tender. for more information about Africa Government projects visit here.
This is such a great resource that you are providing and you give it away for free. I love seeing blog that understand the value of providing a quality resource for free. vibro stone columns
ReplyDelete