The Construction Sector in South Africa 2016

By Catherine Sturman
With total annual income in excess of R392bn and supporting over 500,000 direct jobs in the formal sector, building and construction activities play a v...

With total annual income in excess of R392bn and supporting over 500,000 direct jobs in the formal sector, building and construction activities play a vital role in the South African economy.

The country's nine largest construction companies are involved in major infrastructure development projects, while medium-sized companies are generally active in construction activity relating to road works, bulk water infrastructure and water and sanitation projects.

Approximately 95 percent of companies operating in the local construction sector are classified as small and micro enterprises, and focus mainly on the residential building market.

A sector under pressure: The beleaguered sector remains stifled by the prevailing economic slowdown, and government's failure to implement the roll-out of mega-infrastructure projects has prompted larger construction companies to concentrate on foreign markets.

Role players across the various grades of works cite the following challenges as constraining factors: an increasingly competitive market, delayed payments, labour disruptions, poor productivity, the shortage of skills and the resulting lack of adequate quality control. This is in addition to the rising cost of construction materials and low profit margins.

For major players, further issues include the spectre of collusive conduct, damage claims for anti-competitive behaviour and the impending exit from the sector of construction titan, Murray & Roberts, a company that has been an integral part of the South African building and construction landscape since 1902.

The report on the South African construction industry and related activities, which includes scaffolding solutions and structurally insulated panel systems (SIPs), describes current conditions and recent developments.

Profiled in the report are 51 companies, including the country's largest construction and engineering companies based on market capitalisation, Wilson Bayly Holmes-Ovcon Ltd (WBHO), Murray & Roberts Holdings Ltd, Raubex Group Ltd, Calgro M3 Holdings Ltd, Group Five Ltd, Aveng Ltd, Stefanutti Stocks Holdings Ltd, Basil Read Holdings Ltd and Esor Ltd.

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Read the December 2016 issue of Construction Global magazine

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