THE BOTTOM LINE
Come on government, get a move on with infrastructure
Even the South African National Roads Agency (Sanral) is strapped for cash and way behind on issuing tenders
With thousands of construction professionals reportedly already through the doors of The African Construction & Totally Concrete Expo in Midrand, it is perhaps time to take stock of the dwindling fortunes of South Africa’s once mighty construction and engineering industry.
The sector largely has been reeling since the end of the 2010 Fifa World Cup in SA. A big part of the problem is that state spending has failed to materialise as promised by the government in its 2012 infrastructure plan. Money is being spent in rural areas, apparently, but little on big projects – such as water and sanitation – for towns and cities.That means many JSE-listed construction groups are now making much more of their money overseas and across the border in Africa. But the industry itself is to blame, along with government policy. The former neglected to transform, diversify or downsize for rural projects in the hope of R4-trillion of promised infrastructure spend on big structures over 15 years.
On the other hand, the state played hardball over collusion in the industry. Most of the biggest listed construction players have paid enormous fines and have agreed to sell in part, or in whole, their domestic civil engineering and building businesses, including steel manufacturing subsidiaries. Others have agreed to mentor emerging contractors. But the slow pace of the process speaks volumes about what is being spent, or not spent, by the government on infrastructure. Even the South African National Roads Agency (Sanral) is strapped for cash and way behind on issuing tenders.
This has made things even more difficult for contractors, as Sanral was really the last of the big spenders among state-run enterprises.