A case apart in South Africa.

Author:Ford, Neil
Position:CONSTRUCTION IN AFRICA
 
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The South African construction industry has always been something of a special case and so it is no surprise that it is currently enjoying a very different experience to the rest of the continent.

Africa's biggest economy was far more severely affected by the global economic crisis than the rest of the continent but the recent downturn in demand for construction services and products may be more the result of companies rushing to complete projects in time for last year's Fifa World Cup, rather than because of any intrinsic weakness in the sector.

Many road, rail, airport, hotel and conference centre projects were scheduled for completion by June 2010, even if they were not directly involved in helping to host the world's second-biggest sporting event.

The date acquired something of an iconic status in the country and high demand for materials and manpower drove up prices and construction activity in the run-up to the event. It was therefore always to be expected that demand would tail away over the subsequent 12 months.

Andries van Heerden, the chief executive of South African construction company Afrimat, said: "The herd behaviour of companies rushing to get the big projects is over and there is a need to focus on smaller projects out in the sticks." The focus is indeed likely to switch from huge profile single projects in the country's main cities to a larger number of smaller schemes, many of them relating to the provision of new low-cost housing in rural areas and poorer suburbs.

Even taking the World Cup boom into account, national cement sales have consistently fallen from September 2008 until the present time. However, Pretoria Portland Cement (PPC) reported that the 4% fall recorded in total national sales between October 2010 and March 2011 was the smallest decline six monthly over that period and so the industry's fortunes may be on the verge of changing. The company also revealed at the end of May that its own sales had fallen by 7% because of its strong exposure to the two worst-affected provinces: Western and Eastern Cape.

As a result, the firm's operating profit fell 26% to R823m ($122.1m), while turnover fell to R3.26bn ($483.7m). Chief executive Paul Stuiver told journalists: "Despite the results not being as good as previously...

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