Page last updated at 11:37 GMT, Monday, 24 August 2009 12:37 UK

Big building boosts South Africa

Workers protest outside Soccer City in Johannesburg
Workers staged a strike last month demanding higher pay on World Cup projects

By Egon Cossou
Producer, BBC Africa Business Report, Johannesburg

The construction industry in South Africa is undergoing a major boost at the moment - despite the country's recession.

A frenzy of building has been sparked by the government's $70bn (£42.4bn) stimulus package. But there is an additional factor at play.

The 2010 World Cup - the globe's biggest football tournament - rolls into the country next year.

That has led to a major drive to upgrade South Africa's infrastructure.

All this has meant soaring profits and share prices for the big building companies.

The country's road network is coming in for particular attention. Johannesburg, for instance, is plagued by nightmarish traffic.

That means moving goods and workers can become a logistical nightmare - the last thing anyone needs in the middle of an economic downturn.

So the government is keen to ease the situation.

Route 21

Travel 30km from Johannesburg and you'll find a huge road building project which is designed to upgrade the crucial National Route 21, linking the city with the capital Pretoria.

Work is continuing on National Route 21
Work continues on National Route 21

The project is worth $90m and is a prime example of the race for infrastructure development in South Africa.

It is being carried out by the South Africa-based road building giant Raubex.

Its commercial director Francois Diedrechsen is hopeful that the boom will continue - at least in the short term. But he is planning for slower times.

"In infrastructure spending we believe there are a couple of good years left," he tells the BBC's Africa Business Report.

"However, it clearly cannot continue to grow at the pace it has been growing at. The stimulus is there but it can't be an endless stimulus.

"We're not oblivious to that fact. Hence we've been proactive in shifting our boundaries and expanding into Africa."

Weak housing sector

Away from the big infrastructure projects, however, some parts of the construction industry in South Africa are lagging behind.

Construction worker passes football mural in Cape Town
"Our workers are not benefiting from the 2010 World Cup... They remain in their shacks, they remain poor
Lesiba Seshoka, National Union of Mineworkers

The country may have been spared the worst of the credit crunch, but lending to homebuyers has slowed down and that has hit the companies building homes.

Their troubles, though, may only be temporary.

"I believe it is more of a cyclical slowdown than a structural collapse, simply because there is such a shortage of housing in this country," says according to senior economist Chris Hart from Investment Solution.

"At the lower end there are still millions of people in shanty towns that need accommodation. And that is true probably across Africa.

"Potentially, as the banks start lending again, you will probably see the sector pick up again quite smartly."

Labour unrest

Whether it is house building, or bigger projects, not everyone is convinced about the benefits of a resurgent construction sector.

Unions have staged strikes aimed at improving pay and conditions for workers.

There are concerns that people at the sharp end of the construction industry are getting left behind.

"Our workers are not benefiting from the 2010 World Cup," says Lesiba Seshoka from National Union of Mineworkers, which represents construction workers.

"They have got nothing to show for it. They remain in their shacks, they remain poor.

"There is nothing to show out of this beautiful game that is coming to South Africa. What we have seen is beautiful annual reports belonging to the companies, showing how many millions they have made."

The unions accuse the companies of greed - the firms say without big profits jobs will suffer.

It is a perennial debate. And as that debate continues, so too does work on National Route 21 .

The building firm Raubex is confident it will be completed on time and on budget.

The industry as a whole also seems confident its fortunes will continue to be healthy - at least for the time being.



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