CESA survey highlights SA’s risks – construction sector confidence falls due to lack of government projects and slow pace of tender awards!

The results of Consulting Engineers South Africa’s (CESA’s) Bi-annual Economic and Capacity Survey (BECS) for the period January to June 2022 just released, indicates an improved outlook for 2022 but projections remain below 2% for 2023/24 on the back of higher lending rates dampening potential investment demand and slower consumer demand.

Pressure remains on government to increase investment in infrastructure, up the pace of tender awards, reduce the number of tender cancellations and put measures in place to arrest the increasing ‘brain drain’ of the country’s technical expertise.

South Africa’s growth outlook was lifted to 2.3 percent from 1.9 percent in 2022 and 1.4 percent for 2023 with risks remaining in the form of declining private and public sector investment, lack of structural reforms, higher inflationand the impact of tighter monetary policy leading to higher lending rates. We continue to experience inflationary pressures, a weak public fiscus and higher lending rates although private sector investment shows some recovery but investment in construction still shows no signs of recovery. GDP growth is expected to remain at or below 2 percent for the next three years.

“The lack of investment in infrastructure development, particularly from the public sector, coupled with the lack of government projects and the slow pace at which tenders are awarded coupled with the high percentage of tender cancellations, is very concerning. The impact of this on the consulting engineering and construction sector is having a devastating effect on the sustainability of companies. The industry is experiencing an increase in the loss of technical skills through emigration. It is a well-known fact that infrastructure development underpins economic growth, and we are appealing to government to stop talking and to start implementing infrastructure projects,” says CESA CEO, Chris Campbell.