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Construction firms in South Africa to restructure as market demand tumble

Construction  firms in South Africa are on a restructuring mode in the wake of a fall in market demand for construction and engineering material in the country.

During a Macquarie Group CEO construction conference in the capital Johannesburg, the firms outlined their restructuring strategies in a bid to cope with the prevailing situation in the country.

The construction firms in South Africa reported declining profits in recent years, mainly as a result of the global financial crisis. They singled out poor market in global mining commodities rout and worrying fall in demand for steel products.

It is a situation that has badly affected companies listed in the Johannesburg Stock Exchange such as construction company Murray and Roberts.

During its presentation to the conference, Murray & Roberts announced that it was diversifying to become an international engineering and construction group as part of the 2020 strategic plan.

On its part, celebrated construction firm in South Africa WBHO said that it did not expect major changes in 2016/2017. WBHO noted that South Africa’s electricity crisis was creating further opportunities in the energy sector for construction firms. The firm also observed that Africa still had opportunities for construction works. However, the firm lamented low mining opportunities in Africa.

Against this backdrop, WHBO said that it was re-positioning its civil engineering business away from a subdued mining sector.

On the other hand, construction group Basil Read said that its organizational restructuring into divisions, was finished, move that will give it more cost-effective administrative and management structures.

Plans by construction firms in South Africa to restructure comes only days after their counterparts in Ghana warned of impending massive job cuts in the wake of prohibitively high lending rate by commercial banks in the country.

Real estate developer in Ghana Frank Aboagye Danyansah lamented that the high lending rate risk eroding away the recent gains made in the country especially as far as providing affordable housing is concerned. The developer said that most construction firms were being forced out of business because they were unable to sustain them.

The fall in construction Activities in Ghana and South Africa will directly affect efforts to build more houses in the countries grappling with a huge deficit of affordable houses.

In recent years, South Africa and Ghana have witnessed sprawling construction activates but recent hard economic times are threatening to derail the boom and it remains to be seen if the restructuring by South African companies will have any meaningful impact.

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