Despite the challenges weighing on South Africa’s civil engineering sector, there were indications of growth, the South African Federation of Civil Engineering Contractors (Safcec) said on Tuesday.
Safcec’s State of Industry report revealed that, while prospects for the next two years seemed uncertain, order books have shown stronger-than-expected improvements.
Government spending on infrastructure was expected to remain a priority and would not be affected by cuts in spending that are necessary to align budgets with lower levels of revenue, Safcec said in a statement on Tuesday.
However, to accelerate growth, government would either have to increase the revenue available for infrastructure spending or improve expenditure.
The group cited government’s commitment to ten potential special economic zones (SEZs) countrywide that could deliver socioeconomic benefits and create jobs. The SEZ’s were expected to undergo feasibility studies to determine their viability.
Further, the renewable-energy sector, with the private sector showing increased commitment, offered potential growth opportunities.
However, a number of firms reported low turnover in the first quarter of 2013 on the back of stable, low growth in government’s budget allocations and the possible negative impact of slower domestic and global growth on infrastructure spending in the medium term.
Further, Safcec pointed out that corruption during tender processes, delays and postponements in the awarding of tenders and a shortage of qualified and skilled engineers continued to impede the industry’s growth potential.
The report also warned of capital flow volatility and that emerging economies would need to manage these amid greater exchange-rate pressures.