SA construction sector shows some promise

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SIMON BROWN. I’m chatting now with Dr Roelof Botha about the Q1 2026 Afrimat Construction Index. Roelof, always appreciate the time.

Before we get to the index data, a quick thought from you. Yesterday’s passing of Alan Greenspan – he was Fed chair from 1987 to 2006, through the crash of ’87, the ’97 Asian financial crisis, dotcom’s ‘irrational exuberance’ and 9/11. It was a long term. Maybe a bit of a mixed legacy. Your thoughts on Alan Greenspan as the Fed chair?

DR ROELOF BOTHA: I think he did a pretty good job, better than the people who followed him – for some concern.

SIMON BROWN: Yes. I take your point on that, absolutely. Did he lead us to the 2008 crisis – we’ll never know. But it was almost 20 years, and a lot going through.

Let’s get to that Afrimat Construction Index. This is Q1 of 2026. What stands out to me – you and I have touched on this before – we’ve seen some good employment coming through the sector, and that is hugely important because, as we’ve said before, construction really can help with unemployment.

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DR ROELOF BOTHA: Yes. I always reminisce about what happened en route to the Soccer World Cup in 2010. I remember that period quite vividly.

The South African economy grew at 5% in real terms per annum for four years in a row, and we created literally millions, especially in construction. As part and parcel of that success story we also had the RDP Housing Project and so on.

And then unfortunately we had the crash, and things went quite well until 2015 with Gill Marcus at the helm of the Monetary Policy Committee.

The average real prime rate – which is the prime rate minus CPTI [sic] – during her five-year term of office was 3.4%. That doubled shortly after her retirement.

That was the first disaster. The second one was State Capture, which lasted for a decade. The third one was Covid.

So from that level you’d expect an industry like construction, which is labour intensive to a large extent, to have recovered by now.

But unfortunately, the restrictive monetary policy is still, as far as I’m concerned, the biggest single drawback.

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SIMON BROWN: Absolutely. I take your point on that. The employment is a good number. We’ve got a long way to go on that point.

We’re also seeing the total construction tender activity for February and March – two months of double-digit increases. It’s early days and I wouldn’t say at this point that that this is conclusive that we’re on a rebound, but it is trending in the right direction – albeit, to your point, we’ve a long way to go.

DR ROELOF BOTHA: Yes, I think, to use the expression. the construction sector is certainly ‘geared for growth’. If you look at Afrimat’s acquisition of Lafarge, what they’ve done there, and what I find interesting, just a coincidence, is the real value of building materials sales – 1.4% year on year.

That’s exactly off the nose of the GDP growth rate, 1.4% year on year. So I think that will warm the heart of Andries van Heerden at Afrimat.

And what I also find encouraging from their activities is that they’ve been operating in most of the provinces.

They’ve been working in the eastern Free State, and there have been large projects in KZN, also in Gauteng, despite all the problems we’ve got here with governance.

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But, as you’ve indicated, the tender activity seems to be picking up as well. I’m pinning my hopes – and that wasn’t even mentioned in in the media statement on this – the spend on, what is 14 500km of new grid transmission lines. Now, you need a lot of cement to get those batons up and running.

But they’re taking their time again. I see the private sector, the IPPs [the independent power producers] are getting really frustrated about the time it’s taking to get everything through. It seems as if Eskom still wants to cling to monopoly as far as the grid access unit is concerned – and that worries me tremendously.

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SIMON BROWN: I think it was in the president’s State of the Nation Address that he pointedly said, ‘We are going to separate Eskom’. I agree with you. I’m not sure Eskom wants to be separated, but I think it is going to happen.

We’ve also seen some private-sector capital formation looking better, which is always a good sign as well.

We’ll leave it there. Dr Roelof Botha, appreciate the early morning time.

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