Construction Industry Development Board - cidb Quarterly … · 2019. 9. 13. · Manufacturing. In 2018, the value added by the construction industry in South Africa’s gross domestic

CONSTRUCTIONMONITOR

Supply & Demand Q1 • 2019

CIDB CONSTRUCTION MONITOR – SUPPLY AND DEMAND; APRIL 2019

Acknowledgements: The support of Industry Insight in providing details of contracts awarded is gratefully acknowledged.


1. Introduction ___________________________________________________________________________ 1 2. Gross Fixed Capital Formation ________________________________________________________ 3

2.1 Overview _______________________________________________________________________ 3 3. Construction Value Added ____________________________________________________________ 6

3.1 Construction Projects Awarded ________________________________________________ 7 3.1.1 Projects by Government and the Private Sector _______________________________ 7 3.1.2 Projects by Category ___________________________________________________________ 8 3.1.3 Projects by Location (Provincial overview) _____________________________________ 9 3.2 Forecast ______________________________________________________________________ 10

4. Expenditure against Budget; Municipal and Provincial Government ________________ 12 4.1 Municipal Expenditure ________________________________________________________ 12 4.2 Provincial Expenditure ________________________________________________________ 14

5. Contracts Awarded; Public Sector ____________________________________________________ 15 6. Maintenance Contracts Awarded; Public Sector _____________________________________ 16 7. Supply: Registrations; Grades 2 to 9 _________________________________________________ 17 8. Business Conditions; Public and Private Sectors _____________________________________ 18 9. Constraints to Business Growth ______________________________________________________ 19

Appendix 1: Municipal Expenditure for Selected Provinces __________________________ 21 Appendix 2: Provincial Expenditure for Selected Provinces __________________________ 23 Appendix 3: Provincial Public Sector Demand _______________________________________ 25 Appendix 4: Maintenance Contracts Awarded; Public Sector: Provinces _____________ 26 Appendix 5: Provincial Contractor Registrations; Grades 2 to 9 _____________________ 27 Appendix 6: Business Confidence Index: Provincial Results __________________________ 28

1


1. Introduction The cidb Construction Monitor; Supply and Demand is part of a suite of four quarterly cidb Construction Monitor publications: Quarter 1: Supply & Demand; Quarter 2: Contractor Development; Quarter 3: Employment; and Quarter 4: Empowerment. The cidb Construction Monitor; Supply and Demand provides an overview of the structure of the construction industry, public sector infrastructure spend and business conditions in South Africa, and covers the Quarter 2 of 2018 to Quarter 1 of 2019. The Construction Monitor focuses on public sector supply and demand at national and provincial levels, and deals primarily with the General Building (GB) and Civil Engineering (CE) cidb Classes of Works. The background and key assumptions used in developing and in interpreting the cidb Construction Monitor are highlighted below: i) Contracts Awarded: Details of contracts awarded is obtained from the cidb iTender Register of

Projects supported by the Industry Insight Project Database. (The support of Industry Insight in providing this information is gratefully acknowledged.) However, it should be noted that the Industry Insight information for contracts awarded lags the Construction Monitor by one quarter.

ii) Expenditure Against Budget: Details of infrastructure expenditure against budget is obtained from National Treasury. At present, details presented here are only for municipalities and provinces, while national expenditure against budget will be included when available. Note that the fiscal year for municipal expenditure begins on 1 July, which corresponds to Quarter 3 of the calendar year. Similarly, the fiscal year for provinces expenditure begins on 1 April, which corresponds to Quarter 2 of the calendar year.

iii) Contractor Registrations: Contractor information is obtained from the cidb Register of

Contractors, and considers:

contractors registered in Grades 2 to 9; and General Building (GB) and Civil Engineering (CE) Class of Works.

The data is then aggregated into the following categories: Grade 9 contractors; typically contractors that operate

at a national and international level; Grades 7 and 8; typically contractors that operate at a

regional / provincial level; Grades 5 and 6; typically contractors in transition from

operating at a local to a regional / provincial level; and Grades 2 to 4; typically established and developing contractors that operate at a local level.

Grade Characteristics 9 national / international

7 & 8 provincial / regional 5 & 6 local / regional 2 to 4 local

2

It should be noted that Grade 9 contractors in particular work across provinces, and do not therefore reflect the contracting capacity within a particular province.

iv) Business Conditions: The cidb Construction Monitor includes perceptions of the confidence in business conditions, insufficient demand for work, tendering competition and access to credit obtained from the cidb BER SME Business Confidence Survey1, which measures business conditions at a national and at provincial level and in various contractor grades.

1 cidb (2019). cidb SME Business Conditions Survey. Construction Industry Development Board, http://www.cidb

.org.za/knowledge/publications/industry_reports

3

2. Gross Fixed Capital Formation

2.1 Overview The construction sector plays a significant role in terms of its contribution to capital formation, from 2005 to 2018, the construction sector’s average contribution to gross fixed capital formation was around 43%, this is in line with a number of studies which have confirmed that approximately half of the investment in gross fixed capital formation in developing countries is done by the construction sector. An analysis of Gross Fixed Capital Formation in Construction (GFCFC) in current prices (i.e. not adjusted for inflation) for the year 2018 is shown below, which includes investment by General Government, Public Corporations and the Private Sector on the following2: civil construction; non-residential buildings and residential buildings. The total GFCFC spend in 2018 amounted to around R430 billion, as follows:

Gross Fixed Capital Formation in Construction; 2018 Rand (Million)

A more detailed breakdown is given below:

General Government

Public Corporations

Private Sector Total

Civil Construction 77 325 90 433 91 974 259 732 Non-Residential 32 010 3 260 49 118 84 388 Residential 1 785 65 84 236 86 086 Total 111 120 93 758 225 238 430 206

2 SARB (2019). Quarterly Bulletin March 2019. www.resbank.co.za

113 293 121 658

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Year-on-year decline in GFCFC from 2017 to 2018 amounted to -1,4% real and is due to persistently weak business and investor confidence, policy uncertainty and government’s current constrained resources. The decline in investment has been mainly driven by a decline in investment by the public sector. A breakdown of the growth in GFCF is as follows: General Government: -3,6% real decline from 2017 to 2018, Public Corporations: -11,3% real decline from 2017 to 2018; and Private sector: 4,6% real growth from 2017 to 2018.

Investment in Construction Works: Year-on-year percentage change

Value of Total Construction Investment

Construction Activity

R million Contribution (%) Change (%)

2016 2017 2018 2016 2017 2018 2016 2017 2018

General Government 79 949 75 360 72 602 27,7% 26,4% 25,8% ‐6,7% ‐5,7% ‐3,7% Public Corporation 81 863 69 405 61 738 28,4% 24,4% 22,0% ‐0,7% ‐15,2% ‐11,0% Private Sector 126 762 140 189 146 680 43,9% 49,2% 52,2% 0,4% 10,6% 4,6%

Total 288 574 284 954 281 020 100% 100% 100% ‐2,0% ‐1,3% ‐1,4%

The growth in investment by the private sector was due to a double digit growth in civil engineering sub-sector of 18% in 2018 (2017: 39%).

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Investment in Civil Works

Value of Construction Investment by Private Sector



2016 2017 2018 2016 2017 2018 2016 2017 2018

Residential 55 861 56 744 54 672 44,1% 40,5% 37,3% ‐3,6% 1,6% ‐3,7% Non‐Residential 33 941 32 054 31 378 26,8% 22,9% 21,4% 11,3% ‐5,6% ‐2,1% Civil Works 36 960 51 391 60 630 29,2% 36,7% 41,3% ‐2,3% 39,0% 18,0%

Total 126 762 140 189 146 680 100% 100% 100% 0,4% 10,6% 4,6%

In real terms, the year-on-year decline in investment in total construction works of -1,4% comprised of civil construction which declined by -0,1%, while residential and non-residential buildings decreased by -3,2% and -3,3% respectively. The contribution of civil construction has been weakening since 2010. The following figure illustrates that civil construction works investment is still the highest contributor to Gross Fixed Capital Formation in Construction, but the rate of growth is lower than the preceding years. Total Construction Investment declined by -1.4% in 2018 (2017: -1.3%). The residential building sub-sector led with a decline of -3.3% (2017: -7.1%). The non-residential building sub-sector also experienced a decline of -3.2% in 2018 (2017: 2.3% growth), and the civil construction works sub-sector also declined by -0.1% in 2018 (2017: -0.4%).

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Gross Fixed Capital Formation in Construction; 2010 Rand (Million)

Value of Construction Investment by Sub-sector



2016 2017 2018

Annual 2016 2017 2018 2016 2017 2018 Q1 Q2 Q3 Q4

Residential 56 444 57 746 14 722 13 067 13 951 14 131 55 871 19,6% 20,3% 19,9% ‐3,9% 2,3% ‐3,2%Non‐Residential 59 987 55 728 13 630 13 699 13 292 13 291 53 912 20,8% 19,6% 19,2% 2,7% ‐7,1% ‐3,3%Civil Works 172 143 171 481 39 192 43 843 44 675 43 527 171 237 59,7% 60,2% 60,9% ‐2,9% ‐0,4% ‐0,1%

Total 288 574 284 955 67 544 70 609 71 918 70 949 281 020 100% 100% 100% ‐2,0% ‐1,3% ‐1,4%

3. Construction Value Added The construction sector accounts for around 4% of gross domestic product, its contribution is relatively small compared to other sectors of the economy such as Finance, Government, Trade and Manufacturing. In 2018, the value added by the construction industry in South Africa’s gross domestic product amounted to around R108 billion (real prices), with a year-on-year decrease of -1,2% or declining by R1,3 billion3. Construction output/value added is a function of the level of investment in the sector. It fluctuates with the construction investment, construction output has been falling in line with residential, non-residential buildings and civil works investment. This can also be seen from the analysis below; according to the analysis the highest growth in construction output was around 16% in 2007 and the highest decline was -1,2% in 2018. The construction industry has been on a downturn since 2008.

3 StatsSA (2018). Gross Domestic Product: Fourth Quarter 2018. www.statssa.gov.za

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Change in Construction Gross Fixed Capital Formation (CGFCF) and Construction Value Add (CVA)

3.1 Construction Projects Awarded

3.1.1 Projects by Government and the Private Sector According to Industry Insight Project Database4 (which represents a large sample of projects) the proportion of projects between the public sector/government and the private sector stands at 63% and 37% in 2018. The government sector contracted by -18% to R43 billion (2017: R53 billion), while the private sector contracted by -11% to R25 billion (2017: R28 billion). The public sector is still the main contributor of construction projects awarded in 2018. The decline in the value of projects awarded reflects the pressure that the industry is experiencing.

4 Industry Insight (2019). Investment Map Monitor. www.industryinsight.co.za

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Value of projects awarded

Acknowledgements

3.1.2 Projects by Category According to Industry Insight Project Database5, over 50% of the construction projects awarded in 2018 were in civil works at R35 billion (52%), non-residential projects were R24 billion (35%) and residential projects were R9 billion (14%). All of the sub-categories registered a lower value of projects awarded compared to previous years, the nominal decline in residential buildings was -41%, non-residential buildings was -17% and for civil works it was -2%. The private sector accounts for the larger proportion of residential building projects awarded in 2018 at R7,2 billion (77%) while the government sector awarded R2,2 billion (23%) of residential building projects. The private sector also accounts for a larger proportion of non-residential building projects awarded in 2018 at R13,8 billion (58%) while the government sector awarded R10,1 billion (42%) of non-residential building projects. The public sector / government accounts for a larger proportion of civil works projects awarded R31 billion (88%) while the private sector awarded R4,3 billion (12%) of civil works projects awarded.

5 Industry Insight (2019). Investment Map Monitor. www.industryinsight.co.za

35 81128 393 25 295

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Value of Projects Awarded by Class of Works

Acknowledgements

3.1.3 Projects by Location (Provincial overview) A provincial overview of the construction industry shows that construction output/value added is driven by the following provinces; Eastern Cape, Gauteng, KwaZulu Natal and Western Cape. Construction activity is concentrated in Gauteng which accounted for 26% (R18 billion); Western Cape which accounted for 21% (R14 billion); KwaZulu Natal which accounted for 15% (R10 billion) and Eastern Cape which accounted for 15% (R10 billion).

Provincial Overview of Projects Awards

18 843 15 8969 310

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The public sector dominates the projects awarded in most provinces (8 out of 9 provinces). It has the largest proportion of projects awarded in the following provinces; Limpopo (93% or R5 billion), Eastern Cape (90% or R9 billion); North West (90% or R1.9 billion); KwaZulu Natal (78% or R7.8billion); Free State (76% or R2 billion); Northern Cape (73% or R1 billion ); Mpumalanga (72% or R3 billion) and Western Cape (53% or R7.6 billion). The private sector has the largest proportion of projects awarded in only one province, Gauteng (69% or R12.6 billion).

Provincial Project Awards by Sector

3.2 Forecast The growth in civil construction has in part fuelled the growth in the number of cidb registered contractors (see Sections 6 and 7), and any future growth or contraction in construction investment is therefore clearly of importance to the sustainability of the industry. The forecast investment in GFCF in 2010 Rands by Industry Insight6 is shown in the following table. The forecast by Industry Insight takes into account the following key considerations, negative and positive: Positive: greater degree of policy certainty; escaped a ratings downgrade; overall SOE reform; unbundling ESKOM; State Capture Commission of Enquiry. Negative:

6 Industry Insight (2019). Construction Industry Forecast Report, April 2019. www.industryinsight.co.za

90%

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31%

78%

93%

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90%

73%

53%

10%

24%

69%

22%

7%

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10%

27%

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Eastern Cape

Free State

Gauteng

KwaZulu Natal

Limpopo

Mpumalanga

North West

Northern Cape

Western Cape

Government Private

Acknowledgements

11

lack of investment in the economy; lack of confidence; potential ratings downgrade; state capture; deterioration in key indicators such as awarded contracts and company current order books; policy uncertainty and political instability has a negative impact on private investment; US/China Trade War; slowing of Chinese economy. The resulting forecast suggests a contraction in both building and civil construction works in 2019, and a contraction or negative growth in the next two years for total construction (GFCF).

2014 2015 2016 2017 2018 2019f 2020f 2021f Construction-Total 292 678 294 455 288 574 284 955 281 020 276 105 272 662 272 343

% change 4,7% 0,6% -2,0% -1,3% -1,4% -1,7% -1,2% 0,0% Building 116 595 117 125 116 431 113 474 109 783 108 293 108 206 109 861

% change 8,2% 0,5% -0,6% -2,5% -3,3% -1,4% -0,1% 0,0% Residential-Building 55 771 58 705 56 444 57 746 55 871 56 430 57 276 58 422

% change 9,1% 5,3% -3,9% 2,3% -3,2% 1,0% 1,5% 2,0% Non-residential Building 60 824 58 420 59 987 55 728 53 912 51 863 50 930 51 439

% change 7,4% -4.0% 2,7% -7.1% -3,3% -3.8% -1.8% 1,0% Construction Works 176 083 177 330 172 143 171 481 171 237 167 812 164 456 162 483

% change 2,5% 0,7% -2,9% -0,4% -0,1% -2.0% -2.0% -1.2%

Acknowledgements:

12

4. Expenditure against Budget; Municipal and Provincial Government

4.1 Municipal Expenditure An analysis of municipal capital expenditure for South Africa is shown below and given in in Appendix 1 for selected provinces7: the phased linear budget, actual expenditure and variance (in Rm) for all municipalities; and variance against budget for the most recent four quarters, for metro, local and district municipalities.

From an analysis of the municipal expenditure for the whole of South Africa: as at Quarter 2 of the 2018/19 municipal financial year (2018Q4 of the calendar year), the total

municipal capital expenditure amounted to around R19,8 billion or 53% of the phased budget – representing an underspend against linear phased budget of around R18 billion;

at a more detailed level, as at Quarter 2 of the 2018/19 municipal financial year (2018Q4 of the calendar year), 46% of the capital phased budget had been spent by Metros, Local Municipalities while District and Local Municipalities spent 64% of the phased budget; and

the underspending for Metros, amounted to around R11billion. Note that at the end of the 2017/18 municipal financial year, the total underspending of Municipalities decreased from around R15 billion (2016/17 FY) to around R13 billion, metros contributed around R11 billion to this underspending. In the 2017/18FY, metro’s had difficulties spending their capital budgets, none of the metro’s spent above 80% of their capital budgets, their capital spend was between 55% and 78%. This was a decline/deterioration from the performance of the 2016/17FY, in which only 2 metros (or 88%) spent below 80% of their capital budgets. Furthermore, from Appendix 1, for the provinces shown, as at Quarter 2 of the 2018/19 municipal financial year (2018Q4 of the calendar year), overall municipal capital expenditure for KwaZulu Natal 7 National Treasury (2018). Local Government Revenue and Expenditure: Second Quarter Local Government

Section 71 Report. mfma.treasury.gov.za

yyyyqq 201801 201802 201803 201804

Metro ‐13,155 ‐10,947 ‐7,223 ‐10,614

District Municipality ‐2,707 ‐2,539 ‐1,336 ‐1,615

Local Municipality 1,158 860 ‐3,497 ‐5,355

Total ‐14,704 ‐12,626 ‐12,055 ‐17,583

Variance against Budget (Rm)

Budget, Actual & Variance (Rm)

Municipal; Expenditure; 201701 to 201804

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was above 60% of the phased budget, while for Eastern Cape, Western Cape and Gauteng spending was below 60% of the phased budget (54%, 47% and 43% respectively). Performance of Municipalities on spending capital budgets

Indicator 2015/16 2016/17 2017/18Budgeted capital expenditure (Rm) 67 954 68 849 71 381Actual capital expenditure (Rm) 54 690 53 892 58 756Actual capital expenditure as a % of budgeted capital expenditure 80% 78% 82%Number of metro's, municipalities, and district municipalities 278 257 257Those spending less than budget Less than 100% 241 225 226Less than 80% 160 147 167Less than 60% 69 64 74Less than 40% 27 30 30Those spending more than budget Greater than 100% 35 29 29Greater than 150% 9 6 5Greater than 200% 4 2 5Greater than 300% 3 2 5 Less than 40% 27 30 30Between 40% and 60% 44 35 51Between 60% and 80% 95 91 94Between 80% and 100% 77 72 53Between 100% and 150% 26 23 24Between 150% and 200% 5 4 -Between 200% and above 4 2 5

The table above shows the number of Municipalities underspending and overspending their capital budgets. In the 2017/18FY 226 (or 88%) of Municipalities spent less than 100% of their capital budgets, the same proportion of underspend occurred in the 2016/17FY. It further shows that in the 2017/18FY 30 (or 12%) of Municipalities spent less than 40% of their capital budgets, 51 spent between 40% and 60%, 94 spent between 60% and 80%, 53 spent between 80% and 100% of their capital budgets. We also find Municipalities that have overspend their capital budgets, 24 spent between 100% and 150% and 5 overspend by more than 200%. Provincially, in Gauteng 82% of Municipalities spent less than 80% of their capital budget, in aggregate terms the actual spending for all Municipalities in Gauteng was 77%. In Eastern Cape 74% of Municipalities spent less than 80% of their capital budget, in aggregate terms the actual spending for all Municipalities in Eastern Cape was 81%. In Western Cape 60% of Municipalities spent less than 80% of their capital budget, in aggregate terms the actual spending for all Municipalities in Western Cape was 70%. In KwaZulu Natal 57% of Municipalities spent less than 80% of their capital budget, in aggregate terms the actual spending for all Municipalities in KwaZulu Natal was 117%.

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4.2 Provincial Expenditure An analysis of provincial capital expenditure for South Africa is shown below and given in Appendix 2 for selected provinces8: the phased linear budget, actual expenditure and variance (in Rm) for all provinces; and variance against budget for the most recent four quarters, for the departments of Education, Health

and Public Works, Roads and Transport.

From an analysis of the provincial expenditure for the whole of South Africa: expenditure for Quarter 2 of 2018/19 provincial financial year (2018Q3 of the calendar year) is at

145% of the phased budget or R32 billion; and at a more detailed level, as at Quarter 2 of the 2018/19 provincial financial year (2018Q3 of the

calendar year), total actual expenditure for Education amounted to 158%, Health amounted to 141%, Public Works, Roads and Transport amounted to 145%, all provincial departments spent over 100% of the phased budget.

Furthermore, from Appendix 2, for the provinces shown, as at Quarter 2 of the 2018/19 provincial financial year (2018Q3 of the calendar year), overall provincial capital expenditure for KwaZulu Natal, Eastern Cape, Western Cape and Gauteng was above 100% of the phased budget (144%, 143%, 143% and 141% respectively). Data for other provinces can be provided on request.

8 National Treasury (2018). Section 32 Provincial Financial Publication (In-year management, monitoring and

reporting). www.treasury.gov.za

yyyyqq 201704 201801 201802 201803

Education 233 ‐39 ‐599 3 390

Health ‐700 ‐805 ‐664 2 039

Works, Roads & Transport 632 ‐615 ‐1 421 4 560

Total 164 ‐1 459 ‐2 685 9 990



Provincial; Expenditure; 201604 to 201803

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5. Contracts Awarded; Public Sector (Note that the information provided by Industry Insight for contracts awarded is lagged by one quarter.) Estimates of the distribution of public sector contracts awarded for South Africa as a whole in the four quarters 2018Q1 to 2018Q4 in Grades 2 to 9 is shown in the adjacent figure – with around 87% of public sector awards by value being in tender Grades 7 to 9 in General Building (GB) and 82% in Civil Engineering (CE).

Of interest to note is that less than 5% of public sector contracts are typically issued in tender Grades 2 to 4 in both GB and at CE. It should be noted however that the largest proportion of the contracts awarded in Grades 7 to 9 are subcontracted down to sub-contractors – typically in Grades 2 to 6. Similar trends are also obtained for the distribution of public sector contract awards for the selected provinces shown in Appendix 3. (Data for other provinces can be provided on request.)

Acknowledgements:

Grade % Distribution

9 34%

7 & 8 53%

5 & 6 9%

2 to 4 4%

Total 100%

9 43%

7 & 8 39%

5 & 6 14%

2 to 4 4%

Total 100%

Demand; Public Sector Awards (% Distribution by Value); 201801 to 201804

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6. Maintenance Contracts Awarded; Public Sector (Note that the information provided by Industry Insight for contracts awarded is lagged by one quarter.) Estimates of the distribution of public sector maintenance contracts awarded by value (including refurbishment, renovations, etc.) in South Africa as a percentage of the total contracts awarded in the Grades 2 to 9 is shown in the figure below.

maintenance contracts in Grades 7 to 9 in General Building (GB) amount to an average of 11%

and Civil Engineering (CE) in Grades 7 to 9 amount to an average of 27% of the total expenditure for 2018Q1 to 2018Q4; and

the percentage of maintenance contracts in Grades 2 to 6 the average is around 16% in General Building (GB), but only around 8% in Civil Engineering (CE) for 2018Q1 to 2018Q4.

Estimates of the distribution of public sector maintenance contract awards for selected provinces are shown in Appendix 4. (Data for other provinces can be provided on request.)

Acknowledgements:


9 7%

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5 & 6 36%

2 to 4 36%

Total 15%

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7 & 8 28%

5 & 6 16%

2 to 4 15%

Total 11%

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7. Supply: Registrations; Grades 2 to 9 Details of the distribution of the total number of registrations in Grades 2 to 9 in General Building (GB) and Civil Engineering (CE) for South Africa are shown in the following figure.

Overall, it is seen that the number of registrations in Grades 2 to 4 accounts for around 88% to 86% of the total registrations in Grades 2 to 9, whereas the number of registrations in Grades 7 to 9 accounts for around 1% to 13% of the total number of registrations. The growth in registrations over the past three years is shown in the following figure. Details of registrations for selected provinces is given in Appendix 5, while details for other provinces can be provided on request.

Grade Number % Distribution

9 71 1%

7 & 8 787 11%

5 & 6 1 571 21%

2 to 4 4 947 67%

Total 7 376 100%

9 107 1%

7 & 8 977 13%

5 & 6 1 819 23%

2 to 4 4 845 63%

Total 7 748 100%

Supply; Registrations per Grade (% Grades 2 to 9); 201901

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8. Business Conditions; Public and Private Sectors (Note that the information provided here is a summary of the cidb / BER SME Business Confidence Survey, available on the cidb web.)

General Building: In 2019Q1, General Building (GB) confidence declined marginally from 34 to 33 index points. Weighing on confidence was a slowdown in activity. Across the grades, the following changes were recorded: Grades 3 & 4 (+14), Grades 5 & 6 (-4) and Grades 7 & 8 (-17). Regardless of the direction of the movements, business confidence remained below the long-term average for all the grades. On a provincial level, Gauteng was the only province that registered a marginal decline in confidence (-3). Although sentiment improved in the other provinces, it remained at very low levels. Civil Engineering: After increasing from an all-time low of 27 in 2018Q4, the confidence of civil engineers fell back to 31 in 2019Q1. Similar to General Building, the deterioration in sentiment was most pronounced among Grades 7 & 8 (-7). Civil Engineering contractors in Grades 3 & 4 and Grades 5 & 6 also registered marginal declines in confidence. Provincially, Civil Engineering contractors in the Eastern Cape (-25) and Western Cape (-20) experienced the sharpest deterioration in sentiment. In fact, in the Eastern Cape none of the respondents are satisfied with current business conditions. Despite marginal upticks in the other two provinces, confidence remained at very depressed levels. Business Confidence for selected provinces is shown in Appendix 7. (Data for other provinces can be provided on request.)

Business Confidence

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All 3 & 4 5 & 6 7 & 8

19

9. Constraints to Business Growth (Note that the information provided here is a summary of the cidb / BER SME Business Confidence Survey, available on the cidb web.) Constraints to business growth (net balance) are given below for General Building (GB) and Civil Engineering (CE) for contractor Grades 3 & 4, 5 & 6 and 7 & 8. i) Lack of access to work is the highest constraint to business growth across all grades, at a net

balance of around 74%. It has increased to around 80% for Grades 7 & 8 CE contractors. Access to work opportunities has decreased slightly as a constraint for GB and CE Grades 3 & 4.

ii) Shortage of skilled labour is the second highest constraint, but less of a constraint for Grades 7 & 8 contractors. Shortage of skilled labour as a constraint has however risen significantly for GB Grades 7 & 8.

iii) Inadequate access to credit is the lowest of the three constraints to business growth, but for contractor Grades 3 & 4 are at a similar level to shortages of skilled labour. Of significance is that inadequate access to credit is increasing as a constraint to business growth in Grades 3 & 4. For Grades 7 & 8, inadequate access to credit does not appear to be a significant constraint.

Business Constraints; Grades 3 & 4

GB CE

0

10

20

30

40

50

60

70

80

90

100

2016

Q2

2017

Q2

2018

Q2

Constraints to Growth

Insufficient Demand for WorkShortage of Skilled LabourInadequate Access to Credit

0

10

20

30

40

50

60

70

80

90

100

201

6Q2

201

7Q2

201

8Q2



20

GB CE


0

10

20

30

40

50

60

70

80

90

100

2016Q

2

2017Q

2

2018Q

2



0

10

20

30

40

50

60

70

80

90

100

2016

Q2

2017

Q2

2018

Q2




GB CE

0

10

20

30

40

50

60

70

80

90

100

2016

Q2

2017

Q2

2018

Q2



0

10

20

30

40

50

60

70

80

90

100

201

6Q2

201

7Q2

201

8Q2



21

Appendix 1: Municipal Expenditure for Selected Provinces

Eastern Cape

Gauteng

yyyyqq 201801 201802 201803 201804

Metro ‐1,157 ‐908 ‐635 ‐857

District Municipality ‐834 ‐255 ‐547 ‐762

Local Municipality ‐566 ‐567 ‐333 ‐572

Total ‐2,557 ‐1,729 ‐1,515 ‐2,191




‐4 000

‐2 000

0

2 000

4 000

6 000

8 000

10 000

2017

01

2017

02

2017

03

2017

04

2018

01

2018

02

2018

03

2018

04


yyyyqq 201801 201802 201803 201804

Metro ‐6,153 ‐3,912 ‐3,803 ‐5,425


Local Municipality ‐453 ‐406 ‐213 ‐302

Total ‐6,639 ‐4,357 ‐4,027 ‐5,748




‐10 000

‐5 000

0

5 000

10 000

15 000

20 000

25 000

2017

01

2017

02

2017

03

2017

04

2018

01

2018

02

2018

03

2018

04


22

Kwa-Zulu Natal

Western Cape

yyyyqq 201801 201802 201803 201804

Metro ‐2,715 ‐2,973 ‐952 ‐1,482


Local Municipality 6,010 6,293 ‐474 ‐597

Total 2,562 2,465 ‐1,829 ‐2,582




‐5 000

0

5 000

10 000

15 000

20 000

2017

01

2017

02

2017

03

2017

04

2018

01

2018

02

2018

03

2018

04


yyyyqq 201801 201802 201803 201804

Metro ‐2,740 ‐2,594 ‐1,614 ‐2,570


Local Municipality ‐1,277 ‐935 ‐540 ‐844

Total ‐4,031 ‐3,535 ‐2,168 ‐3,431




‐6 000

‐4 000

‐2 000

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2017

01

2017

02

2017

03

2017

04

2018

01

2018

02

2018

03

2018

04Variance Budget Actual

23

Appendix 2: Provincial Expenditure for Selected Provinces

Eastern Cape

Gauteng

yyyyqq 201704 201801 201802 201803

Education 112 1 68 777

Health 14 ‐13 ‐147 307

Works, Roads & Transport 143 ‐92 ‐388 112

Total 269 ‐105 ‐467 1 196




‐1 000

0

1 000

2 000

3 000

4 000

5 000

6 000

201604

201701

201702

201703

201704

201801

201802

201803


yyyyqq 201704 201801 201802 201803

Education ‐225 ‐148 ‐201 404

Health ‐590 ‐536 ‐226 38

Works, Roads & Transport 24 110 ‐44 778

Total ‐791 ‐574 ‐470 1 219




‐2 000

0

2 000

4 000

6 000

8 000

201

604

201

701

201

702

201

703

201

704

201

801

201

802

201

803


24

Kwa-Zulu Natal

Western Cape

yyyyqq 201704 201801 201802 201803

Education 126 149 ‐146 828

Health ‐7 ‐101 ‐39 682

Works, Roads & Transport 735 ‐302 ‐463 953

Total 854 ‐253 ‐647 2 463




‐2 000

0

2 000

4 000

6 000

8 000

10 000

12 000

201604

201701

201702

201703

201704

201801

201802

201803


‐2 000

0

2 000

4 000

6 000

8 000

10 000

12 000

201604

201701

201702

201703

201704

201801

201802

201803


yyyyqq 201704 201801 201802 201803

Education ‐56 ‐85 ‐153 544

Health ‐107 ‐75 ‐132 118

Works, Roads & Transport ‐208 ‐143 ‐355 708

Total ‐371 ‐304 ‐640 1 370




‐2 000

0

2 000

4 000

6 000

8 000

201604

201701

201702

201703

201704

201801

201802

201803


‐2 000

0

2 000

4 000

6 000

8 000

201604

201701

201702

201703

201704

201801

201802

201803


25

Appendix 3: Provincial Public Sector Demand

Eastern Cape

Gauteng

Kwa-Zulu Natal Western Cape


9 20%

7 & 8 66%

5 & 6 10%

2 to 4 4%

Total 100%

9 46%

7 & 8 39%

5 & 6 13%

2 to 4 3%

Total 100%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 38%

7 & 8 51%

5 & 6 9%

2 to 4 2%

Total 100%

9 43%

7 & 8 46%

5 & 6 9%

2 to 4 1%

Total 100%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 39%

7 & 8 52%

5 & 6 7%

2 to 4 3%

Total 100%

9 42%

7 & 8 37%

5 & 6 14%

2 to 4 7%

Total 100%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 35%

7 & 8 53%

5 & 6 9%

2 to 4 3%

Total 100%

9 40%

7 & 8 41%

5 & 6 13%

2 to 4 6%

Total 100%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE

26

Appendix 4: Maintenance Contracts Awarded; Public Sector: Provinces

Eastern Cape Gauteng



9 0%

7 & 8 21%

5 & 6 31%

2 to 4 42%

Total 19%

9 15%

7 & 8 40%

5 & 6 13%

2 to 4 22%

Total 7%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 0%

7 & 8 16%

5 & 6 46%

2 to 4 42%

Total 13%

9 52%

7 & 8 28%

5 & 6 31%

2 to 4 32%

Total 22%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 11%

7 & 8 5%

5 & 6 21%

2 to 4 37%

Total 9%

9 8%

7 & 8 11%

5 & 6 4%

2 to 4 12%

Total 4%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 9%

7 & 8 8%

5 & 6 8%

2 to 4 8%

Total 9%

9 7%

7 & 8 19%

5 & 6 6%

2 to 4 6%

Total 3%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE

27

Appendix 5: Provincial Contractor Registrations; Grades 2 to 9

Eastern Cape Gauteng



9 3 0%

7 & 8 60 9%

5 & 6 129 19%

2 to 4 476 71%

Total 668 100%

9 3 0%

7 & 8 67 8%

5 & 6 207 24%

2 to 4 594 68%

Total 871 100%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 50 2%

7 & 8 301 13%

5 & 6 473 21%

2 to 4 1 411 63%

Total 2 235 100%

9 66 4%

7 & 8 366 22%

5 & 6 469 28%

2 to 4 787 47%

Total 1 688 100%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 4 0%

7 & 8 119 7%

5 & 6 254 15%

2 to 4 1 319 78%

Total 1 696 100%

9 14 1%

7 & 8 173 7%

5 & 6 385 15%

2 to 4 1 986 78%

Total 2 558 100%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE


9 7 2%

7 & 8 52 12%

5 & 6 91 21%

2 to 4 291 66%

Total 441 100%

9 13 4%

7 & 8 48 15%

5 & 6 75 23%

2 to 4 191 58%

Total 327 100%


GB

CE

0% 20% 40% 60% 80% 100%

9

7 & 8

5 & 6

2 to 4

GB

CE

28

Appendix 6: Business Confidence Index: Provincial Results

Eastern Cape

Gauteng

KwaZulu-Natal Western Cape

0

10

20

30

40

50

60

70

80

90

100

2019

01

2018

01

2017

01

GB CE

0

10

20

30

40

50

60

70

80

90

100

2019

01

2018

01

2017

01

GB CE

0

10

20

30

40

50

60

70

80

90

100

2019

01

2018

01

2017

01

GB CE

0

10

20

30

40

50

60

70

80

90

100

2019

01

2018

01

2017

01

GB CE

29

Notes

30

31

32

Gauteng Provincial [email protected]

Western Cape Provincial OfficeCape [email protected]

Eastern Cape Provincial [email protected]

Northern Cape Provincial [email protected]

Free State Provincial [email protected]

KwaZulu-Natal Provincial [email protected]

Limpopo Provincial [email protected]

Mpumalanga Provincial OfficeNelspruit (Mbombela)[email protected]

North West Provincial [email protected]

cidb contact number: 086 100 2432

Anonymous Fraud Line: 0800 11 24 32

email: [email protected]

Documents

Construction Industry Development Board - cidb Quarterly … · 2019. 9. 13. · Manufacturing. In 2018, the value added by the construction industry in South Africa’s gross domestic