Loadshedding remains an on-going problem for most industries in South Africa, including construction.
Another, perhaps less well-known, issue is the so-called construction mafia that threatens the future of construction companies in South Africa. These criminal syndicates forcefully extract protection fees from construction companies through intimidation tactics.
The threat posed by the construction mafia has led to a steep decline in international investment, and a mass exodus of skills. Some construction contractors have been forced to abandon construction sites due to alleged intimidation and violence.
Thankfully, some progress was made in 2023 in combatting these syndicates. According to Special Investigating Unit spokesperson Kaizer Kganyago, hundreds of arrests have been made. As of December 2023, there were 52 conviction.
The main causes of the significant decline in business confidence in South Africa in recent years have been loadshedding and several downgrades by foreign rating agencies.
In South Africa, there has been an average 1.2% decrease in business confidence between September 2000 and September 2023. But in early 2023, business confidence in the building industry reached a six-year high. The third quarter saw an increase in this as well.
Alternative energy projects like solar and wind power are now more likely to succeed in light of the current energy crisis and the demand for alternative energy sources.
A greater ceiling for the production of private power has been made possible by concessions granted by the government. The 100 MW licensing threshold for private power generating was raised in 2023. Any size solar and wind plant can now be constructed without a license.
Project financing for renewable energy has also increased. Standard Bank intends to create a $1 billion fund to facilitate the transition to renewable energy sources. The fund’s investment goal is to create a pool of project loans for energy transition projects, renewable energy projects, and other clean technology projects.
