Growth on the blueprints for the construction industry, says CFO John de Sousa

The GVK-Siya Zama CFO explains that the construction industry is expected to grow by 6.2 percent.

Following the impact of Covid-19, the construction industry is finally on the road to recovery and is expected to grow by 6.2 percent this year. “This is inspiring news for an industry that is expected to have a beneficial impact on employment, while contributing to improved sentiment towards the economy,” says GVK-Siya Zama CFO John de Sousa.

Contributing to this recovery is the improved sentiment in the market after the government announced plans to grow public-private partnerships and increase infrastructure spend.

John adds that the positives are clear and that the outlook for the industry and greater economy indicate an upward trajectory.

“This will have a ripple effect in the industry as investor sentiment improves, economies open and budgets expand. The next 12 to 18 months will continue to be a period that is focused on attaining normality as the market stabilises after the pandemic. In this time, it can be expected that margins will remain under pressure in the short term. However, in the longer term, they will continue to grow,” he says.

GVK-Siya Zama, one of South Africa’s largest privately held construction companies, has offices nationwide and employs about 1,500 people directly, working closely with communities and subcontractors nationally.

John explains that the company has largely been able to mitigate the downward employment trend in the construction industry. “The company is in its fourth consecutive year of growth, despite the near recession and Covid-19 pandemic. We have been quite fortunate in that we have been able to increase our staff complement and grow our business over the last few years. This has been due to sticking to our values, prioritising a people-centric approach and being adaptable.”

The company expects further growth between five and 10 percent in the next year. “This will be a year of consolidation. A year of trying to work with what we have, not regressing and trying to be sustainable in a difficult business environment,” he says.

John adds that, while government work has been forthcoming, it's not as fast as industry players would like it to be. “This has been the case for the last five to seven years and hence I believe it shouldn’t really act as a deterrent in the marketplace for local or foreign investment.”

It does, however, appear as if the government is poised to increase its spending on infrastructure, as indicated in the State of the Nation and National Budget speeches.

“There are definite efforts to encourage the private sector to increase investment, and to secure more foreign direct investment in South Africa,” he notes.

John says that the government has encouraged the private sector to be the key employment driver in the country and increased investment will ensure this occurs.

Another positive to emerge from the Sona and budget speeches is the increased focus on private-public partnerships – another indication that the government acknowledges the mutual benefit of this approach for all stakeholders and the economy, he adds.

A negative that could however sway investor sentiment towards hesitancy is the overall economic outlook of two percent for the economy, despite the 6.2 percent projected growth for the construction industry. “Presently, there is limited hope of an overall economic uptrend, but there is always a possibility that this could change,” John explains.

“Obviously our high debt to gross domestic product ratio is also a major burden on the state. And, of course, all of these things were before the war in Ukraine. This further illustrates that as an economy and industry we cannot always go by the projected numbers because of external factors, but if we do, the industry outlook will continue to be positive, resilient and remain on an upward trend.”

Looking ahead to the future, GVK–Siya Zama will look at various emerging opportunities, including PPPs for growth, while aligning itself with its clients at the conceptual stages of projects to get in early and secure work.

John says there has also been an uptick in enquiries from the private sector, especially from property owners looking to repurpose and remodel office space, as work-from-home practices are likely to remain a factor despite Covid-19 loosening its grip. “There are a lot of property vacancies, especially in the central business districts, that landlords will need to deal with.”

“We also have to try, as an industry, to be more efficient in what we do, as we are one of the most inefficient sectors in the country. This process includes skills transfer and training, a key focus for the year ahead; our aim is to improve our efficiencies, empower our staff and SMMEs and in doing so, create growth for all stakeholders in the business,” he concludes.