Investors Wholeheartedly Support Ramaphosa’s Promise to Revitalize South Africa

Along South Africa’s busiest freight corridor, a team of men and women dressed in blue overalls, safety helmets, and reflective jackets is transforming the landscape. As they weave around cement trucks and construction scaffolding, bulldozers are broadening the road that links Gauteng province to the eastern port city of Durban.

Similar initiatives are taking place across the country, as investors funnel capital into the construction sector. They are betting on President Cyril Ramaphosa’s multi-billion-rand project aimed at revitalizing South Africa’s aging infrastructure, which they anticipate will ignite a construction boom. Although challenges like bureaucratic obstacles and criminal activities continue to plague the industry, experts maintain a positive outlook on ongoing advancements.

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“I hold a strong optimism for the construction industry,” noted Tana Mongwe, an analyst at Old Mutual Investment Group in Cape Town, during a summit in September. Four months later, her view remains consistent. “Last year, construction companies reported unprecedented order intake,” she remarked in a Bloomberg interview.

Ramaphosa’s plan, introduced even before his re-election, entails government investments amounting to $88 billion (R1.66 trillion) in the public sector by 2030, with an additional $177 billion (R3.32 trillion) expected from private investments. Orders for construction projects began to increase rapidly soon after he assumed office again last May as part of a market-friendly coalition.

Read: Ramaphosa announces massive infrastructure investment plan

These developments are positively impacting the broader economy. In the third quarter, the construction industry created 176,000 new jobs, bringing total employment in the sector to roughly 1.3 million and contributing to an increase in the national employment rate from 32.1% to 33.5%.

For some industry veterans, the current climate evokes memories of the period leading up to the 2010 World Cup in South Africa, when public infrastructure spending surged. Paul Greyling, a construction manager involved in building Durban’s international airport at that time, recalled how “the rest of the world was in recession, but South Africa prospered due to the infrastructure investment.”

However, following the tournament, construction activity dwindled, and the sector faced numerous challenges that persist today. Various bureaucratic processes complicate visa issuance for foreign firms, navigating procurement systems, and obtaining environmental approvals. While some delays have been reduced, regulatory red tape continues to hinder construction efforts, according to Sanele Mazibuko, chief operating officer of Umngeni Water, a government-run water management agency.

“The timeline for public-private partnerships is excessively lengthy, resulting in setbacks for infrastructure projects,” he explained.

Extortion remains another major obstacle. Since 2019, the South African Department of Public Works and Infrastructure estimates that criminal activities have disrupted over 180 construction projects nationwide, collectively valued at $3.4 billion. Given that construction profit margins are typically slim, Mongwe observed that such disruptions “can severely impact projects and the overall profitability of firms.”

While some work stoppages arise from communities seeking jobs, others stem from criminal organizations demanding a cut of the profits, regardless of their actual involvement in the projects.

Read: Draft regulations to address construction mafia criminality

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Greyling recounted how attempts at extortion by an armed group halted a project he worked on to upgrade a water treatment facility in Hammanskraal, situated north of Johannesburg. This project faced delays of approximately a year and a half, which ultimately contributed to a tragic cholera outbreak.

While larger companies have the means to protect themselves against such threats—either through security measures or by yielding to demands—smaller firms frequently lack these resources.

In addition to these challenges, a more pressing question looms over South Africa’s construction revival: are Ramaphosa’s objectives ambitious enough? Estimates indicate that addressing the country’s infrastructure investment deficit will require between R4 trillion and R6 trillion, or roughly 30-35% of GDP expenditure by 2030.

For analysts like Mongwe, this represents a significant opportunity. “Overall, our national infrastructure spending remains relatively low at about 15% of GDP,” she pointed out, noting that this is roughly 10% lower than that of comparable countries.

Read: Ramaphoria is back as government targets 3.3% growth by end 2025

However, she added, “there is substantial room for enhancement.”

© 2025 Bloomberg

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