Criminal activity, years of load shedding and weak economic growth have reshaped South Africa’s construction industry, contributing to the decline of several of the country’s largest contractors and creating space for smaller firms to play a much bigger role in the sector.
According to Statistics South Africa, the industry has faced numerous challenges over the years, including slow economic growth, low investment, load shedding, labour shortages, the Covid-19 pandemic and criminal activity.
One manifestation of that criminal activity has been the rise of so-called “construction mafia” groups. Law firm Cliffe Dekker Hofmeyr said these organised groups increasingly target construction projects through extortion, intimidation and site invasions, delaying developments, driving up costs and undermining investor confidence.
The difficult operating environment has coincided with the collapse or restructuring of some of South Africa’s biggest construction companies, including Group Five and Basil Read, as well as major restructuring at Murray & Roberts, fundamentally changing the makeup of the industry.
World Cup construction scandal
That decline was compounded by a damaging collusion scandal. In 2009, the Competition Commission began investigating allegations of cartel behaviour among the construction companies building the 2010 FIFA World Cup stadiums. This included allegations of bid-rigging, exchanging cover prices and artificially inflating profit margins on at least six stadiums.
Companies involved in the settlement process included Murray & Roberts, Aveng, WBHO, Group Five and Stefanutti Stocks. In June 2013, the Competition Tribunal reached a fast-track settlement with 15 builders, issuing fines of more than R1.5 billion.
The University of Cape Town noted that the City of Cape Town also filed civil damages claims worth R428 million against the companies that colluded on the Greenpoint stadium tender. “The initial estimated budget for the stadium was R2.9 billion, but it ended up costing R4.5 billion,” the university said.
A shrinking industry
Construction’s contribution to South Africa’s gross domestic product peaked at 4.2% in 2008 before steadily declining to 2.3% in 2025. In real terms, the industry’s value has shrunk from R156 billion in 2016 to R99.1 billion last year, according to Stats SA.
Stats SA’s latest Construction Industry 2024 report shows that small and micro enterprises generated 32.2% of total construction income in 2024, up from 25% a decade earlier.
Their contribution to employment has also grown sharply. Small and micro enterprises accounted for 55.3% of all construction jobs in 2024, compared with 40.6% in 2014. Micro enterprises alone were responsible for 44.8% of employment in the sector.
“Total employment in the construction industry has fluctuated over the years, but without a clear long-term trend,” says the statistical agency.
Large enterprises are increasingly insignificant in the construction sector.
Income spread
At the same time, the dominance of the industry’s largest companies has steadily diminished. In 2014, the 100 biggest construction firms generated 40% of total industry income.
By 2024, that figure had fallen to 26.7%, indicating a less concentrated industry with income spread across a greater number of businesses.
Large companies nevertheless remain significant contributors, generating 43% of industry income in 2024, although they accounted for just 21.4% of employment. Small, medium and micro enterprises employed the remaining 78.6% of the industry’s workforce.
Gauteng remains South Africa’s construction hub, accounting for 35.3% of income from services rendered, 32.8% of salaries and wages, and 26.2% of employment. However, its share of industry activity has declined since 2020, while the Western Cape and KwaZulu-Natal have expanded their footprint.
Signs of recovery
There are signs of recovery, although the sector remains well below previous highs. Employment increased by 12.5% to 539,056 people in 2024 from the 2020 base, but remained well below the 592,125 recorded in 2017.
Construction of buildings recorded the largest employment gains, adding 22,947 jobs between 2020 and 2024. Average annual salaries and wages also increased to R171,316 from R150,541 over the period.
According to Stats SA, the findings point to an industry that has become less concentrated over the past decade, with smaller firms playing an increasingly important role in generating income and creating employment.
