South Africa’s (SA) construction sector is showing early signs of recovery in the third quarter of 2025, with modest growth helping to lift activity in an industry that has been struggling for more than a decade.
While the overall economy expanded by just 0.5% in Q3, construction managed a slight increase of 0.1%, and the Afrimat Construction Index, which tracks sector activity, rose by more than 10%.
The growth comes as the government launches its first Infrastructure and Development Finance Bond, aimed at strengthening capital formation and expanding the national infrastructure pipeline.
Speaking on the developments, Chief Economist and Director at Econometrix, Dr Azzar Jammine, said the sector’s small rebound is welcome but should be viewed in context. “Construction has been the weakest of all sectors over the past decade, with investment levels falling dramatically,” he said. “The gross domestic product contribution of construction has been extremely low, largely due to low confidence in the economy, bureaucratic inefficiencies in municipalities, and criminal syndicates disrupting projects.”
Jammine noted that a combination of factors has suppressed the industry, including corruption and a lack of skilled personnel in municipal roles. “Planning construction takes time, and not all recent initiatives have had their full effect yet. The so-called construction mafia has demanded up to 30% of project revenue, stalling public sector projects,” he explained.
Despite these challenges, recent growth has been supported by substantial government initiatives. Over the next three years, public sector construction projects are expected to total R1.04 trillion ($60.9 billion), and there is a growing emphasis on private-sector involvement to bring in skills and investment. Improvements in energy supply and logistics have also contributed to more robust construction activity.
“While the sector is showing signs of life, we are lifting off from an extremely low base,” Jammine cautioned. “The construction industry has fallen by around 50% over the past decade, so even small gains now are important.”
The launch of the new finance bond may provide further momentum.
–ChannelAfrica–
