en.Wedoany.com Reported - The Afrimat Construction Index (ACI) for the first quarter of 2026 recorded a marginal increase of 0.3% year-on-year, with the value of construction works and completed buildings both rising by over 5% year-on-year, while employment and building material sales also improved. The index is compiled quarterly by economist Dr. Roelof Botha on behalf of Afrimat, reflecting the level of activity in the building and construction sector in real terms, adjusted for inflation.
Dr. Botha stated that although activity levels in South Africa's construction sector remain subdued, the seasonally adjusted ACI reading has risen for the third consecutive quarter, the first such occurrence since the short-term recession in 2020. He particularly noted that the most noteworthy aspect of the latest ACI reading is the gradual stabilisation of two key indicators—the value of completed non-residential buildings and the value of construction works. Employment levels in the construction sector outperformed most other industries, with employment in the first quarter of 2026 increasing by 74,000 people compared to a year earlier. Although the combined value of construction works and buildings accounts for only 5.5% of total economic gross value added, the sector contributed 11% of the year-on-year increase in new jobs in the first quarter of 2026. It should be noted that comparisons with previous versions of the index need to account for new indicators, the rebasing of GDP by Statistics South Africa (Stats SA), and adjustments to Stats SA's quarter-on-quarter estimates, which affect historical values.
Similar to the previous quarter, five out of ten indicators recorded positive year-on-year growth, one remained unchanged, and three of the remaining four recorded year-on-year declines of less than 2%. Botha believes that lower interest rates have played a significant role in reducing the cost of capital formation, while a peace agreement between the United States and Iran could lead to a resumption of the interest rate cutting cycle in the second half of the year.
According to Botha, total construction tender activity recorded double-digit growth for two consecutive months in February and March. Based on a report released by Industry Insights, overall construction tender activity in South Africa increased by 11.4% year-on-year in the first four months of 2026, with significant growth in KwaZulu-Natal, the Eastern Cape, and the North West Province. He added that a 1.4% year-on-year increase in gross domestic product (GDP) in the first quarter of this year also provided a boost to the macroeconomy, driven by a stronger currency and improved investor sentiment following international rating agencies' upgrades to South Africa's sovereign debt outlook. Looking ahead, Botha hopes that the reopening of the Strait of Hormuz in the Middle East will drive inflation lower and restart the central bank's interest rate cutting cycle. He stated that a reduction in the prime lending rate would greatly help restore profitability in the construction sector, which is sensitive to capital costs, particularly in the residential building segment.
Commenting on the latest ACI results, Afrimat CEO Andries van Heerden said the group is committed to building a sustainable and enduring South African company and will continue to support the cornerstone of the local economy, with a focus on construction materials and bulk commodities. Both of these involve open-pit mining, which is core to Afrimat's operations. He added that the company's refocus on aggregate quarries has proven timely, not only making a significant contribution to the 2026 financial year results but also reflected in the ACI outcomes.
Afrimat recently announced the completion of the sale of some of its aggregate quarries and ready-mix concrete plants in South Africa as part of its acquisition of Lafarge South Africa Holdings. The total purchase consideration is R215 million, comprising R160 million in cash payable on 1 July 2026 and R55 million deferred over three years (subject to conditions). Van Heerden stated that the cash received will be used to reduce debt.
Van Heerden noted that projects successfully executed across the country demonstrate Afrimat's ability for stable, sustainable growth. In the Eastern Free State, Afrimat is actively driving the supply of aggregates to a large hydropower project; in the Western Cape, the group is leading the delivery of ready-mix concrete to a wastewater treatment plant and the Devonbosch Lifestyle Estate residential development in Stellenbosch. In KwaZulu-Natal, Afrimat deployed specialised concrete solutions, technical expertise, and piling solutions for a woodchip plant, fire reservoir, and biomass power plant, also completing the supply of aggregate and gravel products for a provincial road and participating in the rehabilitation of another provincial road. In Gauteng, Afrimat supplied aggregates and precision ready-mix concrete for a shopping centre and container depot; in Lephalale, the group successfully delivered crushed aggregates and ready-mix concrete for a solar project. Van Heerden concluded that the continued stable supply of construction materials across South Africa keeps Afrimat's quarries busy. He also mentioned that the recent approval by the National Energy Regulator of South Africa to reduce electricity tariffs for the ferrochrome industry is good news for South Africa and job preservation, meaning the Nkomati anthracite mine will ramp up to full production within the next six months.
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