In an industry where few catalysts have occurred in recent times, the construction & building industry stands to be further eroded if fuel prices continue to increase.
Growth in the construction economic sector was one of 3 sectors showing more than a 1% drop at -2,2% in Q4 2021 compared to Q3 indicating further erosion of activity in an already diminished, but critical employment sector.
The Construction Industry lost 65 000 jobs in Q2 & Q3 of 2021 combined. The ailing industry, hit by lack of economic growth, covid, and the riots in 2021, needs large infrastructure builds and new commercial property builds to prevent further losses from occurring and to enable growth in the construction industry again. The much talked about government infrastructure builds, have all but failed to materialise with the likes of SANRAL announcing that R16 billion in road tenders, that should have been awarded in 2021, amongst others, are being delayed once more.
The resulting hurry up and wait scenario hitting our construction and infrastructure sector will only be exacerbated by rising fuel prices – resulting in a stagnant economy and continued job losses. If the government is serious about halting the erosion of this high employment sector they need to hurry up and move. It is time to expedite the infrastructure projects, and with the surplus revenue that the government has collected from unexpected mineral and agricultural exports, they should have the funds available to do so. The question is why they are delaying these projects?
Bold actions are what is required and if the government is not contemplating it yet, perhaps a fuel subsidy should also be considered for all construction, infrastructure, mining and agriculture development projects. Logistics costs will increasingly come under pressure with a cascade of increases that are likely to reduce activity in construction projects and job numbers. The Transport Sector and the resources around this, are the catalyst for things to get moving, through efficiency and hence reliability of the roads and other infrastructure supporting industry as a whole. This has to urgently be addressed as delays in these projects will ultimately affect all industry’s costs.
There’s also been a bold move, albeit in words so far, to legislate the use of recycled green materials in these projects, which will support the global need for environmental change. These products are created from wasted construction materials that plague many countries, and the private sector has the solution for this. At this point only around 10% of building material and excavation waste is recycled, leaving the balance in landfills. Our natural resources will only have a specific life span and the ancillary markets that support this recycling construction and infrastructure sector are massive and have the potential for large job creation entities.
The construction and related industries could potentially unlock economic growth, improve infrastructure and create much-needed employment and further opportunity for entrepreneurial and job creation. The reinvestment opportunity that can be derived from infrastructure development is one to be focused upon and it is time for making bold and clear decisions to move ahead.