South Africa’s civil construction industry remains under pressure with fixed investment in construction works down to an annualised R108 billion in Q1 2025 (-2.3% year-on-year) – approximately half the 2013 level and the lowest in at least 14 years says Industry Insight.

The sector’s share of GDP has slipped 2.3% (from >5% a decade ago) despite a growing infrastructure deficit. The public sector dominates civil demand with government and SOEs contributing 75% of construction works – even as budget allocations lag inflation and local-government shares are trimmed in the 2025 Medium-Term Expenditure Framework (MTEF).

Industry Insight says that market activity reflects this squeeze with civil tender counts having halved since 2015 to record lows with postponements and cancellations elevated (an 18.7% cancellation rate recorded by June 2025).

The value of civil tenders is down materially year-on-year in most provinces, notably in KwaZulu-Natal (50%) and the Western Cape 30% while tender awards have spiked on a 12-month basis, signalling a conversion driven by a few large projects rather than a broad-based pipeline health.

Furthermore, firm-level and labour dynamics underscore a fragile operating environment with the sector’s employment showing a mild expansion of 2.8% year-on-year, although having outpaced the overall change in employment, with the contribution of the informal market rising to 40% while profit margins slowed to 1.4% in Q1 2025 – the weakest since 2017.

Competitive pressures are also intensifying with the number of CIDB Grade-9 registered contractors having risen by 39% since July 2023, driven by ‘emerging’ firms contributing +70% – even as Grade-9 tender opportunities trend lower, squeezing pricing and execution risk while medium-sized contractors’ turnover share surged to 44% in Q1 2025 but margins across sizes remain thin.