On South Africa’s busiest freight corridor, men and a handful of women decked out in blue overalls, hard hats and reflector jackets transform the landscape. As workers dodge cement mixers and construction site scaffolding, bulldozers widen the road linking the province of Gauteng to the eastern port city of Durban.

Similar scenes are playing out across the country, as investors pour money into the country’s construction sector. They’re betting that a multi-billion-rand strategy by President Cyril Ramaphosa to overhaul South Africa’s ageing infrastructure will trigger a building boom. While red tape and criminal groups targeting the industry remain major concerns, analysts are optimistic that gains will continue.

“I’m extremely excited about the construction sector,” Tana Mongwe, an analyst at Old Mutual Investment Group in Cape Town, said at a summit in September. Four months later, that hasn’t changed. “Construction companies reported record order books” last year, she noted in an interview with Bloomberg.

Ramaphosa’s plan, which had been floated even before his re-election, is for the government to invest $88-billion in the public sector by 2030, with an additional $177-billion coming from private investors. Construction orders began skyrocketing soon after he was returned to office last May as part of a coalition of market-friendly parties.

These gains are now spilling over into the broader economy. Construction added 176 000 new jobs in the third quarter — bringing the total number of jobs in the sector to around 1.3-million — and helped raise the national employment rate from 32.1% to 33.5%.

To some in the industry, the moment has brought back memories of the run-up to the 2010 World Cup in South Africa, when public infrastructure spending spiked. Paul Greyling, a construction manager who was involved in building Durban’s international airport at the time, recalled how “the rest of the world was in recession, but South Africa was booming because of the infrastructure drive.”

Construction dropped off after the games, and the problems that have plagued the sector ever since began to set in. Extensive red tape makes it difficult for foreign companies to get visas, navigate procurement systems and secure environmental approvals. While some wait times have been reduced, bureaucracy is still a major obstacle to building, said Sanele Mazibuko, chief operating officer of State-owned water management company Umngeni Water.

"The public-private partnership process takes forever to conclude, so you end up delaying infrastructure build,” he said.

Extortion is another big problem. Since 2019, South Africa’s Department of Public Works and Infrastructure estimates that criminals have disrupted more than 180 construction projects nationwide, collectively valued at $3.4-billion. Because construction margins tend to be small, Mongwe said, these delays can “have a material impact on projects and companies’ overall profits.”

While some forced stoppages are driven by communities whose members are looking for jobs, they also come from criminal groups who say they are entitled to a share of profits – whether or not they do any work.

Greyling described how extortion efforts by an armed group sidetracked a project he was part of to upgrade a water treatment plant in Hammanskraal, a region north of Johannesburg. The work was delayed about a year and a half, he said, and the lag ultimately contributed to a deadly cholera outbreak.

While bigger businesses have the means to protect themselves from the mafias – either by paying for security or simply giving in to extortion – smaller companies are not typically able to.

Beyond these concerns, an even larger question is hanging over South Africa’s construction boom: whether Ramaphosa’s goals are ambitious enough. Closing the country’s infrastructure investment gap will cost between four- and six-trillion rand, according to most estimates, or between 30-35% of GDP spending by 2030.

To analysts such as Mongwe, however, this represents a big opportunity. “As a country our overall spending on infrastructure projects remains low at ~15% of GDP,” she said, noting that the rate is about 10% higher among peers.

But, she added, “there is still a lot of room to grow.”