The construction industry that is a canary in the coalmine for South Africa’s GDP is crumbling as poorly managed infrastructure projects and the construction mafia bring it to its knees. And the effect on South Africa’s economy is one that should not be ignored.
Speaking on the most recent What’s Treading podcast episode, Njombo Lucky Lekula, MD of PPC’s South Africa Cement and Materials Division, gives a sombre update on of the country’s most important sectors.
Lekula says the value of the construction industry in terms of its contribution is estimated to be between 3.5 – 4% of GDP and the shrinking GDP means the industry is contracting.
“Whatever happens to GDP is informed by the construction industry, there is a very strong correlation between the two,” says Lekula.
According to Lekula the construction industry is being propped up by the private sector, including private houses and commercial property such as malls. But, what Lekula says the country needs are strong infrastructure projects.
Lekula says that these governmental infrastructure projects are imperative. “These are your hospitals, your schools, which we are in dire need of. What we have been lacking for the last couple of years is the civil part of infrastructure provision,” – here Lekula is referring to bridges and infrastructure projects that can unlock the value of the economy’s potential.
“Running a government or a local municipality is a business. And when you are running a business, you need skills to be able to run that business,” he says, but laments the cadre deployment of contracts, the corruption epidemic and the construction mafia who are robbing the industry of budgets and employment opportunities for legitimate construction projects.
These projects are also often left incomplete. “It is very frustrating,” says Lekula. He says that it isn’t just as a manufacturer in the supply chain but also we’ve seen projects that start and never finish”.
Lekula as well as many members of the industry are actively engaging with government, but he says that the wheels of government are very slow. But while Lekula may be disappointed he is not disheartened and is not above a challenge.
“We are continuously engaging with government and have seen examples of PPP’s that have been very good and productive in delivering projects,” he says. But there is much more work to be done.
