You can even take heed to this podcast on iono.fm here.
SIMON BROWN: I’m chatting now with Dr Roelof Botha; he’s speaking about the Afrimat Construction Index. This is for the third quarter of 2022. Roelof, I respect the early morning time. We had some GDP knowledge out which confirmed quarter-on-quarter GDP at 1.6%. That was robust, however building got here in at nearly double that, at 3.1%. Is that belying what you’re seeing on the floor – in different phrases that we are literally seeing an uptick and getting again to pre-pandemic ranges?
DR ROELOF BOTHA: Yes, I’d wish to consider that. And I feel what could be very vital, Simon, is the proven fact that this occurred in opposition to the backdrop of rising rates of interest – rates of interest that ought to not have risen.
I don’t know whether or not you’ve seen the newest feedback by Joseph Stiglitz on the absurdity of financial coverage globally – [all the] extra so in South Africa as a result of we have already got nearly one in all the highest actual rates of interest in the world.
We don’t have any demand inflation; the manufacturing sector capability isn’t remotely close to the place it was earlier than the pandemic. But it’s simply this knee-jerk response.
The US raises charges; they justify [it] to some extent as a result of they’ve obtained just about full employment. We don’t have that, after which the [SA Reserve Bank] simply follows go well with for no specific purpose.
And for the building sector and the Afrimat Construction Index to have elevated 7.2% quarter on quarter, and a couple of.7% 12 months on 12 months in actual phrases is definitely fairly phenomenal.
But there’s an extended highway forward as a result of I feel each listener realises that we’ve an enormous, enormous scarcity of respectable lodging – particularly for the poorer segments of society.
SIMON BROWN: Yes. A large housing shortfall there. Also, the final time we chatted – which I think about was three months again – we spoke round the gross fixed-capital formation. But the place is the authorities spending? The knowledge says fairly merely the authorities isn’t [spending].
Listen:
[TOP STORY] Overview of the Afrimat Construction Index (Sep 2022)
Government nonetheless not spending on important building (Jun 2022)
DR ROELOF BOTHA: Yes. That’s the worrying signal – if it hadn’t been for the non-public sector, I’m afraid…. I feel you and lots of of the listeners know me as one in all the most optimistic economists in the nation, however fairly frankly the authorities is simply not pulling its weight, as a result of the capital formation GDP ratio for the public sector’s capex is simply going to new document lows, sadly. And we had the minister of finance telling us in [the MTBPS in] October that he expects an R80 billion income overrun in February subsequent 12 months.
Why do they not use that cash to repair the roads in Gauteng and Limpopo and the Free State – and in every single place besides in the Western Cape, as a result of in the Western Cape apparently they’ve mastered the approach [laughing] of fixing potholes.
SIMON BROWN: That infrastructure works at two ends. On the one finish – and also you’ve talked about it earlier than – the building, constructing a highway, is localised. It’s native labour. It’s going to be principally native suppliers and the like, so that you get an enormous profit then. And then after all you’ve obtained a superb highway or a faculty or no matter it may be, and that after all massively advantages society.
Government has – I’m going again to budgets that Trevor Manuel gave in the early 2000 – spoken about the infrastructure, nevertheless it simply isn’t [happening].
DR ROELOF BOTHA: Yes. I’m afraid in the case of capital expenditure and infrastructure upkeep, and even solely the upkeep facet of that, it’s all speak…. One of the most important causes for that – and I feel all of us realise that – [can be seen if you just] look by a few of the Auditor-General reviews on what’s occurring in the municipalities. It is totally pathetic. They utilise the complete price range for appointing new employees members, most likely distant kinfolk of the managers working there, after which there’s no cash left for the precise work. Very little will get carried out about this.
I’ve been pinning my hopes on President Ramaphosa’s second time period of workplace – probabilities for which we’ll discover extra about, I hope, after this afternoon’s parliamentary session – and that he’ll crack that whip and do away with a few of the lifeless wooden that he inherited from the Zupta period the place the rot actually stored in.
But it’s simply pathetic that they don’t appear to know that in the case of the complete subject of infrastructure that you must appoint and pull in individuals with challenge administration and engineering capabilities, and [then] help in transferring these abilities. But [by] simply appointing individuals by nepotism and cadre deployment into senior positions at municipalities and in provinces, and count on them to repair these items after they don’t remotely have the abilities, we’re not getting wherever.
And the roads are actually a giant downside. The Romans had an expression: ‘Via vita’ – ‘the road is life’ (sic). If that’s true, then we’re in deep trouble in South Africa.
SIMON BROWN: Yes. A final query. Retail commerce gross sales, {hardware} – which as I perceive is kind of you, I and the listeners going to our native Mica over the weekend – that, quarter on quarter, was up at some 6%. The year-on-year quantity is down due to course final 12 months we had been all in lockdown and changing every part. Is that (kind of us spending) suggesting that the shoppers are on the market spending once more and really visiting the native ironmongery shop?
DR ROELOF BOTHA: Absolutely. If you take a look at what occurred to the wholesale building materials commerce – 13.3% quarter on quarter up in actual phrases – that is magnificent stuff. It’s gone to an all-time document excessive, and that feeds into the retail sector. So I feel the fourth quarter goes to look actually good, even higher than the third quarter the place the Afrimat Index shocked on the upside.
SIMON BROWN: we’ll go away it there. That was Roelof Botha speaking about the Afrimat Construction Index. Roelof, I respect, as all the time, the early morning.
Listen to the full MoneywebNOW podcast each weekday morning right here.
