[TOP STORY] Overview of the Afrimat Construction Index

JIMMY MOYAHA: I’m chatting now with the Afrimat Construction Index curator, Dr Roelof Botha. Good morning, sir.


JIMMY MOYAHA: Please help us make sense of the data. There are a lot of graphs. There are a lot of pretty-looking graphs. There are some graphs that don’t really agree with what we want to see. But overall the index speaks to the construction sector mainly in South Africa, and its value and its contributions towards our economy. Can you just give us a broad overview of the latest figures?

Dr ROELOF BOTHA: Yes, certainly. As usual with indices like these, there’s good news and bad news. The good news, if you look at it, the quarter-on-quarter and the year-on-year growth rates of the consecutive indicators of the Afrimat construction index. The value of billings completed in real terms is just amazing: year-on-year 21% growth, quarter-on-quarter almost 20% growth.

I’m of the opinion that there remains in many parts of South Africa a huge backlog at both ends of the market – the top and the bottom end of the market – for decent housing right up to the top, of course. It’s just a pity that when it gets to building plans passed, which is an indicator of what is likely to happen in future, that’s not looking so good. It’s only marginally down, fortunately, quarter-on-quarter by just over 1%.

It goes right back to a recent statement by President [Cyril] Ramaphosa, where he seemed to indicate that government is starting to take the decay of many municipalities, the dysfunctionality, rather seriously. According to whatever standards they’ve got in this regard, they have actually improved the functionality at some of these municipalities, but I believe that one of the main problems of municipalities is that they take a very long time to approve building plans and to provide all the necessary approvals for other legal requirements. We have an overregulated economy – it’s not even debatable.

JIMMY MOYAHA: Yes. And I suppose that also then filters through to some of the numbers that you were alluding to earlier, around the fact that there’s such a big difference between the actual number of plans or the value of plans that have been approved relative to what’s been completed. We’ve got almost R10 billion worth of plans that have been approved, but only just over R6 billion worth, according to the data, that have actually been completed.

That then obviously lends itself to asking the question of what more can be done from, as you mentioned, things around deregulation. The report also alluded to the fact that some of the government’s problems included things like load shedding. But in your opinion what more could be done to close this gap, to ensure that more buildings are completed, to ensure that the construction sector is aided in achieving its outcomes a lot more?

Dr ROELOF BOTHA: Yes. It’s not only buildings. Of course it’s also roads, it’s also dams, it’s also improving the quality of out harbours, which is absolutely shocking, but at least they’re still operating, But just for the listeners’ benefit, because the two of us, we can see the slide, the Afrimat Construction Index slide, and it’s very easy to explain this.

If the listeners can just imagine you are drawing a horizontal line, and then you go straight down and right back up again – so you’ve got a V in front of you. And then you continue with that horizontal line more or less where it was. That’s the pattern. The bottom of the V, of course, is the second quarter of 2020, when we were governed by the Command Council. Fortunately that’s behind us now. I was almost arrested for jogging on my front lawn. [Both laugh]

But the dilemma is that we don’t want a horizontal line, we want this line to go north. And to do that, it must continue … Really, this is so important to South Africans in so many respects: improving the functionality of the local authorities.

I just want to take us back to the latter part of the [President Nelson] Mandela and [President Thabo] Mbeki era, when they were in charge before the disastrous Zupta era. This country built more than three million RDP [Reconstruction and Development Programme] houses, decent houses. In India, ***  sorry, I can’t pronounce that name, it’s an Indian name – but essentially it means houses for the rural poor. With that programme, they have already built about 11 million houses. Now, if you look at the population differential between our 60 million and India’s 1.4 billion, this was almost like a modern economic miracle – what we did with the RDP housing programme – and that more or less ground to a halt when President Ramaphosa’s predecessor came to the party, and we know what happened then.  Then there were other priorities, like eroding the competitiveness and the efficiency and competence of our state-owned enterprises. But that’s behind us now.

So my advice to government is just resuscitate the RDP housing programme. This time around, with a little bit of luck, with a greater partnership approach with the private sector, we should build houses by the thousands in South Africa.

The interesting thing about the Indian project – and the listeners I think will find this very interesting – one of the very few requirements for that (it’s also subsidisation) but the owner, the dwellers of the house, the family, they have to build their house themselves; no contractors are allowed. In the process, obviously, the government of India, the local governments do provide technical assistance for people who don’t know what the mix must be between concrete and sand and aggregate.

So there’s so much that we can do, especially if we involve the private sector.

JIMMY MOYAHA: I like that you mentioned the private sector. You actually answered a question I had, and that was just to simply ask, should the private sector be involved in the infrastructure, things around Eskom and that sort of thing, given that the data that we see in our index shows that the capital formation for the private sector has far outweighed that of the ratio of the capital formation for the public sector. But you’ve answered that quite rightly. I think we definitely do need some government and private-sector involvement in terms of government projects to help them get through.

Thank you, Dr Botha, for that. That was Dr Roelof Botha, giving us some context on the Afrimat Construction Index that’s coming out today.

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