cidb quarterly monitor; supply & demand; 2018 q1; rev i · 2018. 5. 29. · the cidb...

CONSTRUCTIONMONITOR

Supply & Demand Q1 • 2018

CIDB CONSTRUCTION MONITOR – SUPPLY AND DEMAND; APRIL 2018 Revision 1

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

CIDB CONSTRUCTION MONITOR – SUPPLY AND DEMAND; APRIL 2018

1. Introduction ______________________________________________________________ 1 2. Gross Fixed Capital Formation ______________________________________________ 3

2.1 Overview __________________________________________________________ 3 2.2 Forecast ___________________________________________________________ 9

3. Expenditure against Budget; Municipal and Provincial Government ________________ 11 3.1 Municipal Expenditure ______________________________________________ 11 3.2 Provincial Expenditure _______________________________________________ 12

4. Contracts Awarded; Public Sector ___________________________________________ 13 5. Maintenance Contracts Awarded; Public Sector ________________________________ 14 6. Supply: Registrations; Grades 2 to 9 _________________________________________ 15 7. Business Conditions; Public and Private Sectors ________________________________ 16 8. Constraints to Business Growth _____________________________________________ 18

Appendix 1: Municipal Expenditure for Selected Provinces _______________________ 20 Appendix 2: Provincial Expenditure for Selected Provinces ________________________ 22 Appendix 3: Provincial Public Sector Demand _________________________________ 24 Appendix 4: Maintenance Contracts Awarded; Public Sector: Provinces ____________ 25 Appendix 5: Provincial Contractor Registrations; Grades 2 to 9 ___________________ 26 Appendix 6: Business Confidence Index: Provincial Results _______________________ 27

1

CIDB CONSTRUCTION MONITOR – SUPPLY AND DEMAND; APRIL 2018

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 2017 to Quarter 1 of 2018. 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. 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.

Grade Characteristics 9 national / international

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

2

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 (2018). 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 2017, the construction sector’s average contribution to gross fixed capital formation was 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 (GFCF) in current prices (i.e. not adjusted for inflation) for the year 2017 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 GFCF spend in 2017 amounted to around R436 billion, as follows:

Gross Fixed Capital Formation in Construction; 2017 Rand (Million)

A more detailed breakdown is given below:

General Government

Public Corporations

Private Sector

Total

Construction 82 238 123 964 65 267 271 469 Non-Residential 32 613 3 038 43 675 79 326 Residential 1 639 58 83 206 84 903

Total 116 490 127 060 192 148 435 698

2 SARB (2018). Quarterly Bulletin March 2018. www.resbank.co.za

116 490 127 060

192 148

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Year-on-year decrease in GFCF from 2016 to 2017 amounted to -2,1% real (down from 0,5% real growth in 2016), and this is due to persistently weak business and investor confidence, policy uncertainty, fiscal constraints faced by government and challenges currently faced by SOE’s (see Section 8). A breakdown of the decrease in GFCF is as follows: • General Government: -5,5% real decrease from 2016 to 2017, declining further from -1,8% real decline

from 2015 to 2016, which is a clear indication of government’s current constrained resources. • Public Corporations: -1,3% real decrease from 2016 to 2017; and • Private sector: -0,4% real decrease or contraction from 2016 to 2017. The decrease in investment by both the public and private sectors is clearly evident from the above. In real terms, the year-on-year decline in investment in total construction works of -2,1% comprised of civil construction and non-residential buildings which declined by -1,9% and -6.4% respectively, residential buildings increased by a marginal 1,5%. Currently, the percentage share of investment in total construction by Government (which includes general government and public corporations) is 56% and the percentage share of the private sector is 44%. Civil construction contributes the biggest share of the total construction investment (GFCF), amounting to 63% of total GFCF. Civil construction has shown phenomenal growth, with an average growth of around 11% from 2005 to 2017. The construction boom experienced in civil construction between the years 2005 to 2009 was largely attributable to the construction of the stadia for 2010, Gauteng Freeway Improvement Programme (GFIP), Gautrain, ACSA infrastructure programme and the ESKOM build programme. During the year 2011 and 2013, the private sector experienced further peaks in investment in construction and this was due to the high cost of the capital equipment on the solar and wind projects (renewables energy projects). The public sector is the largest client of civil construction works, with a share of 76% of total investment in construction. At the end of 2017, public sector contribution to construction works was as follows; 30% by general government and 46% by public corporations. Since 2012, the contribution by public corporations to construction works has been weakening, it has declined from a share of 53% in 2010 to 46% in 2017. General Government which includes National, Provincial and Local Government mainly invests in social infrastructure, while Public Corporations invest in economic infrastructure. The figure below shows the year-on-year growth of civil construction. It also reflects the challenges and fiscal constraints experienced by general government and public corporations (State Owned Entities).

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

The private sector is the largest client of building investment, both residential and non-residential buildings, with a share of 98% and 55% respectively. Between the year 2009 and 2017, a contraction or a decrease in investment by the private sector has been observed in both residential and non-residential buildings. This has

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General Government Public Corporations Private Total

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negatively impacted on the total buildings investment. In 2008, the share of private sector investment for non-residential buildings was 70%, by the end of 2017 the share of investment had decreased substantially to 55%. The public sector had to counteract this decline in investment by the private sector. In the public sector, the main contributor to non-residential buildings is general government, with a share of 41%, public corporations have a marginal share of 4%. The private sector has also had marginal declines on its share of investment in residential buildings, in 2010 the private sector’s share of investment was 99.7%, by the end of 2010 it was 98%. This is due to the policy uncertainty which has a negative impact on investor confidence. At the end of 2017, residential buildings experienced a year-on-year growth of 1,5% while non-residential buildings experienced year-on-year contraction of -2%. The figures below shows that year-on-year percentage changes of residential and non-residential buildings focusing on the private sector’s investment.

Investment in Residential Buildings

Investment in Non-Residential Buildings

The following figure illustrates that civil construction works investment is at its highest value, but the rate of growth is lower than the preceding years, which reflects the constraints for both Government and the Private Sector.

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

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 2017, the value added by the construction industry in South Africa’s gross domestic product amounted to around R109 billion (real prices), with a year-on-year decrease of -0,3% or declining by R339 million3. 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 construction 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 -0.3% in 2017. The construction industry has been on a downturn since 2008.

3 StatsSA (2018). Gross Domestic Product: Fourth Quarter 2017. www.statssa.gov.za

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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 the urban provinces. In 2016 these four provinces collectively accounted for around 79% of construction output. Their share of construction value added is shown below.

The dominance of Gauteng, KwaZulu Natal, Western Cape and Eastern Cape in construction spend by province is shown below.

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GFCF CVA

Western Cape19%

Eastern Cape8%

Northern Cape2%

Free State3%

KwaZulu-Natal17%North West

4%

Gauteng35%

Mpumalanga6%

Limpopo6%

8

Construction Spend by Province - % (2016Q1 - 2016Q4) (Estimates: Industry Insight Database) Province Building Civil Total Gauteng 41% 11% 27% KwaZulu-Natal 19% 19% 19% Western Cape 21% 15% 18% Eastern Cape 8% 19% 13% Limpopo 4% 13% 8% North West 2% 10% 6% Mpumalanga 3% 7% 5% Free State 2% 4% 3% Northern Cape 2% 2% 2% Total 100% 100% 100%

Construction Spend by Province - % (2017Q1 - 2017Q4) Estimates: Industry Insight Database Province Building Civil Total Gauteng 36% 15% 27% KwaZulu-Natal 19% 19% 19% Western Cape 15% 14% 15% Eastern Cape 13% 15% 14% Limpopo 6% 15% 10% North West 2% 8% 5% Mpumalanga 3% 7% 5% Free State 4% 4% 4% Northern Cape 1% 3% 2% Total 100% 100% 100%

Total public sector spend or awards for the year 2017 amounted to around 65% of total spend. Civil projects accounted for 66% whilst building projects accounted for 33% of total public sector spend. The high investment by government in construction or civil projects can be clearly seen from the table and investment map below which reflects that in all provinces there were more projects awarded in civil than in building works in the year 2017.

Public Sector Construction Spend by Province - % (2017Q1 - 2017Q4) Estimates: Industry Insight Database Province Building Civil KwaZulu-Natal 41% 59% Eastern Cape 42% 57% Western Cape 26% 69% Gauteng 31% 69% Limpopo 24% 76% North West 26% 71% Mpumalanga 35% 65% Free State 32% 68% Northern Cape 24% 76% Total 33% 66%

9

Estimated value of public sector construction projects awarded; 2017 (Building versus Civil split)

According to the Industry Insight investment map4 (which represents a large sample of projects) year-on-year nominal decline in total construction awards from 2016 to 2017 amounted to -17%, nominal decline in building awards was -16% while nominal decline in civil awards was -18%. The following provinces experienced increases, Free State (22%) and Limpopo (7%), while the following provinces experienced substantial decreases; Western Cape (-32%), North West (-26%), Gauteng (-19%) and KwaZulu Natal (-17%). It should be noted that three of the provinces that experienced major declines in awards are the provinces that account for a major share in construction activity, hence the decline in construction output. The table below shows the year-on-year breakdown in awards for provinces.

Year-on-year increases in total construction awards (2016 to 2017) Estimates: Industry Insight Database Province Building Civil Total Eastern Cape 38% -35% -10% Free State 98% -15% 22% Gauteng -27% 17% -19% KwaZulu-Natal -15% -19% -17% Limpopo 47% -5% 7% Mpumalanga -6% -25% -18% North West 6% -36% -26% Northern Cape -45% 51% -1% Western Cape -40% -23% -32% Total -16% -18% -17%

2.2 Forecast

The growth in civil construction has in part fuelled the growth in the number of cidb registered contractors, and any future growth or contraction in construction investment is therefore clearly of importance to the sustainability of the industry.

4 Industry Insight (2018). Investment Map Monitor. www.industryinsight.co.za

Acknowledgements

10

The forecast investment in GFCF in 2010 Rands by Industry Insight5 is shown in the following table. The forecast by Industry Insight takes into account the following key considerations, negative and positive: Positive: • expected global economic recovery and commodity pick up which will stimulate key industries; • more optimism about current political situation; • a moderate uptick in private investment expected in 2018; • rand strength and expected moderate pressure on inflation. Negative: • rising interest rates in advanced economies; • fiscal constraints in government which will lead to a falloff or budget cuts in infrastructure spending; • challenges experienced by SOE’s; • ratings agencies. The resulting forecast suggests a contraction in total construction works in 2018 as a result of a forecasted contraction of -3% in construction works which is due to a fall in public infrastructure spending as well as SOE’s inability to effectively spend their budget allocations. GFCF; Rand (Billion) 2010 2013 2014 2015 2016 2017f 2018f 2019f Construction-Total 276,684 288,659 303,354 304,900 297,075 292,279 297,771

% change 4,3% 5,1% 0,5% -2,6% -1,6% 1,9%

Building 104,822 107,447 110,573 107,156 102,891 103,920 106,021 % change 2,5% 2,9% -3,1% -4,0% 1,0% 2,0%

Residential-Building 51,114 52,526 57,056 55,685 53,736 54,273 55,630 % change 2,8% 8,6% -2,4% -3,5% 1,0% 2,5%

Non-residential Building 53,708 54,921 53,517 51,471 49,155 49,646 50,391 % change 2,3% -2,6% -3,8% -4,5% 1,0% 1,5%

Construction Works 171,862 181,212 192,781 197,744 194,185 188,359 191,750 % change 5,4% 6,4% 2,6% -1,8% -3,0% 2,0%

Acknowledgements:

5 Budget Review 2018, Infrastructure Allocations and the Impact on Construction. Industry Insight Focus Forum, 14 March 2018

11

3. Expenditure against Budget; Municipal and Provincial Government

3.1 Municipal Expenditure

An analysis of municipal capital expenditure for South Africa is shown below and given in in Appendix 1 for selected provinces6: • 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 2017/18 municipal financial year (2017Q4 of the calendar year), the total

municipal capital expenditure amounted to around R20,5 billion or 56% of the phased budget – representing an underspend against linear phased budget of around R16 billion;

• at a more detailed level, as at Quarter 2 of the 2017/18 municipal financial year (2017Q4 of the calendar year), 50% of the capital phased budget had been spent by Metros, while District and Local Municipalities spent 64% of the phased budget; and

• the underspending for Metros amounted to around R10 billion. Note that at the end of the 2016/17 municipal financial year, the total underspending of Municipalities increased from around R13 billion (2015/16) to around R16 billion, this reflects the capacity constraints in the infrastructure delivery process that are experienced in Local Municipalities. Furthermore, from Appendix 1, for the provinces shown, as at Quarter 2 of the 2017/18 municipal financial year (2017Q4 of the calendar year), overall municipal capital expenditure for Eastern Cape and KwaZulu Natal was above 60% of the phased budget (65% and 61% respectively), while for Western Cape and Gauteng spending was below 60% of the phased budget (51% and 46% respectively). 6 National Treasury (2018). Local Government Revenue and Expenditure: Second Quarter Local Government Section

71 Report. mfma.treasury.gov.za

yyyyqq 201701 201702 201703 201704Metro -11,148 -5,854 -6,335 -9,862District Municipality -2,144 -2,809 -1,031 -1,709Local Municipality -6,653 -6,294 -2,880 -4,322Total -19,945 -14,957 -10,246 -15,893

Variance against Budget (Rm)

Budget, Actual & Variance (Rm)Municipal; Expenditure; 201601 to 201704

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3.2 Provincial Expenditure

An analysis of provincial capital expenditure for South Africa is shown below and given in Appendix 2 for selected provinces7: • 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 3 of 2017/18 provincial financial year (2017Q4 of the calendar year) is at 100%

of the phased budget or R34 billion; and • at a more detailed level, as at Quarter 3 of the 2017/18 provincial financial year (2017Q4 of the calendar

year), total actual expenditure for Health amounted to 90%, whilst Education and Public Works, Roads and Transport spent over 100% of the phased budget.

Furthermore, from Appendix 2, for the provinces shown, as at Quarter 3 of the 2017/18 provincial financial year (2017Q4 of the calendar year), overall provincial capital expenditure for Eastern Cape and KwaZulu Natal was above 100% of the phased budget (106% and 110% respectively), Gauteng and Western Cape spent below 95% of the phased budget (83% and 92% respectively). (Data for other provinces can be provided on request]. Note that at the end of the 2016/17 provincial financial year, the total underspending of provincial departments was R1.4billion.

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

reporting). www.treasury.gov.za

yyyyqq 201701 201702 201703 201704Education -786 -536 -716 233Health -605 -767 -1,130 -700Works, Roads & Transp -6 -845 -1,451 632Total -1,397 -2,148 -3,297 164


Budget, Actual & Variance (Rm)Provincial; Expenditure; 201601 to 201704

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4. 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 2017Q1 to 2017Q4 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); 201701 to 201704

GB

CE

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9

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2 to 4

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CE

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5. 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 7% and Civil Engineering (CE) in Grades 7 to 9 amount to an average of 18% of the total expenditure for 2017Q1 to 2017Q4; and

• the percentage of maintenance contracts in Grades 2 to 6 the average is around 18% in General Building (GB), but only around 8% in Civil Engineering (CE) for 2017Q1 to 2017Q4.

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%7 & 8 15%5 & 6 36%2 to 4 36%Total 15%

9 26%7 & 8 28%5 & 6 16%2 to 4 15%Total 11%

Maintenance; Public Sector Awards (% of Value per Grade); 201701 to 201704

GB

CE

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9

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CE

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6. 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 64% to 68% of the total registrations in Grades 2 to 9, whereas the number of registrations in Grades 7 to 9 accounts for around 1% to 12% 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 Black (%)

9 56 1%7 & 8 690 10%5 & 6 1393 21%2 to 4 4576 68%Total 6715 100%

9 96 1%7 & 8 853 12%5 & 6 1602 23%2 to 4 4541 64%Total 7092 100%

Supply; Registrations per Grade (% Grades 2 to 9); 201801

GB

CE

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CE

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7. 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: During the first quarter of 2018, business confidence for general builders was unchanged at 36 index points. However, business conditions were more favourable, in line with better activity and profitability. Constraints to business operations were largely unchanged. Nevertheless, the indicator rating insufficient demand for new building work as a constraint to business operations remained elevated, which bodes ill for building activity in the near term. Results across the three grades showed a fall in confidence among the Grades 3 & 4 (supported by weakness in underlying indicators). For Grades 5 & 6 and Grades 7 & 8, improved sentiment came mostly on the back of better activity growth. It should be noted that, irrespective of the movements in sentiment for all three grades, confidence levels remained below their long-term averages. Amongst the big four provinces, confidence for Western Cape building contractors remained above 50 index points, while the opposite was true for the others. In sum, an improvement in underlying indicators was seen for all four provinces, except in KwaZulu-Natal. Discouragingly, building confidence in the Eastern Cape, KwaZulu-Natal and Gauteng is oscillating around the poor level of 30 index points. Civil Contractors: Civil contractor confidence was barely changed in 2018Q1. The cidb index edged up by 1 index point to 36. Some positive movements in construction activity helped alleviate some pressure off profitability. Both activity and profitability were lifted from exceptionally low levels seen in the previous quarter.

Grades 5 & 6 civil contractor confidence was mostly stable at 41 index points. This was reflective of persistent pressure on profitability in spite of some improvement in activity. For Grades 3 & 4 the slight pick-up in sentiment was barely supported by underlying indicators. On the other hand, higher confidence for Grades 7 & 8 came on the back of improved activity and profitability.

The overall provincial picture for civil contractors was rather morose, especially in light of the reversed gain in confidence in the Western Cape. While there were some slight improvements in sentiment for the other three provinces during 2018Q1, Western Cape confidence plunged to its worst level since 2013Q2. In all, confidence levels for all four provinces rested below 40-index points during the survey quarter. This should not be surprising, however, given that key underlying indicators are well below their long-term averages.

Confidence for both the building and civil engineering sectors was largely unchanged at the depressed level of 36 index points each during 2018Q1. From a grades perspective, confidence levels are oscillating around 40 index points in both sectors, reflecting broad-based strain. The picture is hardly more encouraging at the provincial level. General builders in the Western Cape seem to be the only ones who remain upbeat, with

Business ConfidenceGB CE

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confidence above 50 points. For the rest of the provinces in both building and civil, confidence levels are mostly in the 30’s.

Business Confidence for selected provinces is shown in Appendix 6. (Data for other provinces can be provided on request.)

18

8. 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 70%. It has increased to around 85% for Grades 7 & 8 GB contractors. This is not positive for activity in the near term.

ii) Shortage of skilled labour is the second highest constraint, but less of a constraint for Grades 7 & 8 contractors.

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 & 4GB CE

0102030405060708090

100

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row

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Insufficient Demand for WorkShortage of Skilled LabourInadequate Access to Credit

0102030405060708090

10020

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Cons

trai

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row

thInsufficient Demand for WorkShortage of Skilled LabourInadequate Access to Credit


0102030405060708090

100

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Cons

trai

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o G

row

thInsufficient Demand for WorkShortage of Skilled LabourInadequate Access to Credit

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100

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Appendix 1: Municipal Expenditure for Selected Provinces

Eastern Cape

Gauteng

yyyyqq 201701 201702 201703 201704Metro -935 -595 -453 -619District Municipality -585 -784 -174 -569Local Municipality -671 -708 -260 -372Total -2,192 -2,088 -887 -1,560



-4 000

-2 000

0

2 000

4 000

6 000

8 000

10 000

2016

01

2016

02

2016

03

2016

04

2017

01

2017

02

2017

03

2017

04


yyyyqq 201701 201702 201703 201704Metro -7,087 -4,830 -3,812 -5,320District Municipality -8 -14 12 9Local Municipality -464 -333 -181 -218Total -7,560 -5,176 -3,981 -5,529



-10 000

-5 000

0

5 000

10 000

15 000

20 000

25 000

2016

01

2016

02

2016

03

2016

04

2017

01

2017

02

2017

03

2017

04


21

Kwa-Zulu Natal

Western Cape

yyyyqq 201701 201702 201703 201704Metro -1,320 -627 -943 -1,606District Municipality -401 -566 -348 -430Local Municipality -1,167 -1,007 -549 -783Total -2,888 -2,199 -1,840 -2,819



-4 000-2 000

02 0004 0006 0008 000

10 00012 00014 00016 000

2016

01

2016

02

2016

03

2016

04

2017

01

2017

02

2017

03

2017

04


yyyyqq 201701 201702 201703 201704Metro -1,375 -806 -965 -2,130District Municipality -14 -5 -9 -14Local Municipality -1,171 -892 -461 -866Total -2,561 -1,702 -1,436 -3,009



-4 000

-2 000

0

2 000

4 000

6 000

8 000

10 000

12 000

2016

01

2016

02

2016

03

2016

04

2017

01

2017

02

2017

03

2017

04


22

Appendix 2: Provincial Expenditure for Selected Provinces

Eastern Cape

Gauteng

yyyyqq 201701 201702 201703 201704Education -86 -207 -27 112Health -107 -192 -166 14Works, Roads & Transp 0 125 -1 143Total -193 -274 -194 269



-1 000

0

1 000

2 000

3 000

4 000

5 000

6 000

2016

01

2016

02

2016

03

2016

04

2017

01

2017

02

2017

03

2017

04


yyyyqq 201701 201702 201703 201704Education -159 -135 -488 -225Health -95 -152 -533 -590Works, Roads & Transp 0 -128 -266 24Total -255 -415 -1,287 -791



-2 000-1 000

01 0002 0003 0004 0005 0006 0007 0008 000

2016

01

2016

02

2016

03

2016

04

2017

01

2017

02

2017

03

2017

04


23

Kwa-Zulu Natal

Western Cape

yyyyqq 201701 201702 201703 201704Education 36 93 28 126Health -95 -68 -26 -7Works, Roads & Transp 0 7 -112 735Total -59 32 -110 854



-2 000

0

2 000

4 000

6 000

8 000

10 000

12 000

2016

01

2016

02

2016

03

2016

04

2017

01

2017

02

2017

03

2017

04


yyyyqq 201701 201702 201703 201704Education -9 -150 -211 -56Health 10 -30 -114 -107Works, Roads & Transp 0 -132 -333 -208Total 1 -311 -659 -371



-2 000-1 000

01 0002 0003 0004 0005 0006 0007 000

2016

01

2016

02

2016

03

2016

04

2017

01

2017

02

2017

03

2017

04


24

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 27%7 & 8 55%5 & 6 14%2 to 4 4%Total 100%

9 38%7 & 8 46%5 & 6 12%2 to 4 4%Total 100%


GB

CE

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

9

7 & 8

5 & 6

2 to 4

GB

CE

25

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 44%7 & 8 30%5 & 6 18%2 to 4 24%Total 31%

9 17%7 & 8 40%5 & 6 14%2 to 4 22%Total 7%


GB

CE

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

9

7 & 8

5 & 6

2 to 4

GB

CE

26

Appendix 5: Provincial Contractor Registrations; Grades 2 to 9

Eastern Cape

Gauteng


27

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

2018

01

2017

01

2016

01

GB CE

0

10

20

30

40

50

60

70

80

90

100

2018

01

2017

01

2016

01

GB CE

0

10

20

30

40

50

60

70

80

90

100

2018

01

2017

01

2016

01

GB CE

0

10

20

30

40

50

60

70

80

90

100

2018

01

2017

01

2016

01

GB CE

28

Notes

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]

cidb quarterly monitor; supply & demand; 2018 q1; rev i · 2018. 5. 29. · the cidb...

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