South Africa

Despite the potential of a massive infrastructure-spending programme by the South African government to spur growth for the construction industry local contractors are grappling with delays in tendering many projects, which is leaving order books thinly marked and confidence low.

After two slow years following the landmark 2010 FIFA World Cup, South Africa’s tourism sector may now be returning to form. The industry is considerably more upbeat than it was one year ago, though downside risks – particularly the uncertain global economy – and domestic weaknesses, such as negative perceptions, are likely to persist through 2013.

Japan has joined France, Germany, China and South Korea as a prospective investor in South Africa’s proposed high-speed rail system, which, once built, will link Johannesburg and Durban on the east coast. However, while there is no doubt about the attractiveness of the multi-billion dollar large-scale infrastructure project, questions remain about whether the project will prove profitable for private sector partners unless it is subsidised.

The exacerbation of some of South Africa’s more intractable economic weaknesses – including contentious labour relations and tensions and uncertainty within the ruling African National Congress (ANC) – have combined to make 2012 a hugely challenging year for the continent’s largest economy.

Unsecured lending is on the rise in South Africa, sparking debate over whether the growth rate in this loan category should be reined in to avoid a potential credit bubble and protect vulnerable consumers from entering into a cycle of over-indebtedness.

The slow rollout of state infrastructure projects and subdued activity in the private sector is once again putting pressure on South Africa’s construction industry, prompting some firms to expand activity abroad by tapping into regional markets.