- Language: English
- Published: July 2012
- Region: Africa, South Africa
South Africa Infrastructure Report Q1 2013
- Published: January 2013
- Region: Africa, South Africa
- 88 pages
- Business Monitor International
World Cup excesses, heavy bureaucracy and continuing political wrangles have weighed heavy on South Africa's previous glories. Though the country can still boast with the continent's most advanced infrastructure, we are now highlighting a significant relative regional decline. Despite a slow return to positive territory, with a real construction industry growth of 3.6% for 2013, the risks are still plentiful: policy uncertainty, cumbersome bureaucracy, intense credit rating pressure and violent clashes in relation to several strikes at mines across the country. Hence, even the announcement of Zuma's new US$462bn infrastructure plan does little to change our outlook for the country's construction sector.
Though we are seeing a slow return to growth, South Africa's construction industry is still lagging behind many of its neighbours, registering a strong average growth of 6% for the same time period.
Following the 2010 World Cup government finances were pushed to the limit in order to complete projects on time. Hence, a drawback in funding and subsequent activity was noticed almost immediately after the tournament. Real growth decelerated from 7.8% year-on-year (y-o-y) in 2009 to 0.9% y-o-y in 2010, and continued to weigh heavily on domestic construction companies in 2011, which resulted in falling share prices. That said, growth levels are unlikely to ever return to those seen before the World Cup, as they were driven by an artificial stimulus and a front-loading of the project pipeline.
However, with economic growth slowly ticking up, we are seeing a gradual improvement within the wider South African construction sector. This has been underscored by the measured improvements seen in the performances of numerous construction companies.
Our medium-term outlook for the country's construction sector is one of cautious and modest growth.
Statistics South Africa registered a weak 2.4% real growth for the first six months of 2012, in line with our full year 2012 estimate of 2.5%. On the back of this we maintain our 3.6% real growth outlook for 2013. That despite President Zuma's announcement of a new infrastructure plan, which does little to alter our view. In fact, the 15year, US$462bn, plan contains little detail of how to overcome both the regulatory and the funding constraints which continue to block South Africa's infrastructure potential.
Furthermore, it remains unclear how this new scheme aligns with previous infrastructure plans, such as the ZAR3.2tr announced in a budget speech in February 2012, where five geographically focussed infrastructure development programmes were identified:
- Develop and integrate rail, road and water infrastructure centred around the Waterberg and Steelpoort areas of Limpopo, to unlock coal, platinum, palladium, chrome and other minerals.
- Improve the movement of goods through the Durban Free State Gauteng logistics and industrial corridor by prioritising a range of rail and port improvements, supported by Transnet over seven years.
- A new 'South Eastern node' in the Eastern Cape, to bolster industrial and agricultural development and export capacity. Including construction of a dam on the Umzimvubu river and a 16mn tonne/year manganese export channel through the Port of Ngqura.
- An initiative to expand transport and electricity infrastructure in the north-west of the country,
including the upgrading of 10 priority roads.
- A number of projects on the West Coast, including the expansion of the Sishen-Saldanha ironore corridor to 100mn tonnes.
However, much of this plan drew upon huge capex schemes by the country's state-owned infrastructure operators, including Eskom, Transnet, Prasa and Sanral. They all have multi-billion dollar plans in the pipeline; but, financing proved and continues to be a major obstacle. With little government funding available, huge sums are required from the international financial community. For this reason, investment is far from assured and thus we have refrained from incorporating these investment plans into our medium-term forecasts for the sector. SHOW LESS READ MORE >
BMI Industry View 5
SWOT Analysis 7
South Africa Infrastructure Industry SWOT 7
Market Overview 8
Competitive Landscape 8
Table: EQS Data 9
Building Materials 10
Cement Forecasts 16
Table: South Africa Cement Production and Consumption Data 16
Table: South Africa Cement Production and Consumption Long Term Forecasts, 2016-2022 16
Industry Forecast Scenario 18
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Construction And Infrastructure Forecast Scenario 22
Transport Infrastructure 25
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Transport Infrastructure Outlook and Overview 30
Major Projects Table - Transport 34
Table: Major Projects - Transport 34
Energy And Utilities Infrastructure 37
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Energy and Utilities Infrastructure Outlook and Overview 41
Major Projects Table - Energy And Utilities 43
Table: Major Projects - Energy And Utilities 43
Residential/Non-Residential Construction and Social Infrastructure 49
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Residential/Non-Residential Construction and Social Infrastructure Forecast Outlook and Overview 50
Major Projects Table - Residential/Non-Residential Construction and Social Infrastructure 54
Table: Major Projects - Construction And Social Infrastructure 54
Risk/Reward Ratings 55
South Africa's Risk/Reward Ratings 55
Regional Overview 57
Table: Sub-Saharan Africa Infrastructure Risk / Reward Ratings 59
Company Profiles 60
Murray & Roberts Group (M&R) 67
Global Overview 69
Industry Forecasts 76
Construction Industry 77
Data Methodology 77
New Infrastructure Data Sub-sectors 77
Capital Investment 79
Construction Sector Employment 80
Infrastructure Risk/Reward Ratings 80
Table: Infrastructure Business Environment Indicators 81
Project Finance Ratings 82
Table: Design And Construction Phase 83
Table: Commissioning And Operating Phase - Commercial Construction 84
Table: Commissioning And Operating Phase - Energy And Utilities 85
Table: Commissioning And Operating Phase - Transport 86
Murray & Roberts Group (M&R)