Botha says the marginal declines in the prime overdraft rate since September last year have
not been sufficient to exert a meaningful positive impact on the ACI, with
the construction sector having been hamstrung since the high interest rates started to "bite
into the pockets of prospective home-owners and property developers", as witnessed by the
decline in the real value of building plans passed by the metros and larger municipalities.
Over the past three years, these have declined for Gauteng, the Western Cape and
KwaZulu-Natal.

“Construction is the most labour-intensive sector in the economy, and the restrictive
monetary policy has not only prevented this sector from recovering from the pandemic but
has also contributed to the sector entering a deep recession,” he says.

In addition, parts of the country experienced above-average rainfall in the first quarter of this
year, severely impacting construction activity and production in several provinces.

KwaZulu-Natal had a noticeable increase over its historical average, consistent with reports
of the province experiencing exceptionally heavy rain. Gauteng also experienced above-
average rainfall, particularly in January, while the North West saw a notable increase in
rainfall compared to its historical average. 

The exceptionally high rainfall was a major contributing factor to the decline of some of the
indicators comprising the ACI during the first quarter, with only two indicators showing
growth on a year-on-year basis.

According to Botha, the roadmap for higher and sustained economic growth in
South Africa that was published recently by the World Bank at the request of the
government, provides ample opportunity for eliminating some of the impediments to a revival
of the construction sector, especially in the area of enhancing the competence of decision-
making in relevant public sector agencies. 

“Hopefully, the government will soon start to implement the recommendations of the World
Bank roadmap, which, together with a further significant lowering of interest rates, should
pave the way for a revival of construction sector activity,” he says.

Afrimat CEO Andries van Heerden, meanwhile, says the company is seeing market
demand that is "significantly stronger than originally anticipated

Despite heavy rainfall in the North West, the dryer weather has come at a perfect time and
we have made up some of the heightened demand we experienced for our products," he
comments, adding that demand for Afrimat’s low-carbon cement product continues to be
strong.

“Quarrying and fly ash operations are performing significantly better than the previous year,
with the former Lafarge quarry volumes increasing, and in some areas, where
large projects are under way, such as in KwaZulu-Natal, demand for construction materials
has been strong.”

Should the government roll out its announced infrastructure investment over the next three
years, Afrimat stands ready. “This spend will be hugely beneficial to the country in terms of
vital job creation as well as ensuring economic activity is heightened. This is especially true
in terms of logistics, with mineral and material exports being critical to the fiscus of the
country. The renewed focus on rail maintenance is creating a welcome increase in the
demand for construction materials such as ballast stone,” says Van Heerden.  

“In my opinion, it is critical for the government to ensure that export logistics are maintained
and optimised for the wealth of exports our country has. Thankfully, Afrimat has been able
to export anthracite via the Maputo port, and in the first quarter, two shipments were
exported with further shipments currently being loaded.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online