Building Boom Builds Rural Economy

Posted On Friday, 15 March 2013 10:28 Published by eProp@News
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Rural South Africans, almost neglected for so long, are being empowered  as  schools, shopping malls, roads and residential developments in often, remote areas, have seen increasing development. 

Social grants have a great deal to do with this empowerment. Rural towns are humming with the sound of busy building as people are improving their homes.

A firm which sells building materials directly to cash-paying customers, JSE-Listed Cashbuild has over 190 outlets around the country, fifty of those outlets are in rural areas. The company reports that its rural business revenue has outperformed the revenue of its city outlets. The average revenue per rural store increased by 80%, compared with the company's average of 60% over the last few years. 

Cashbuild's outlying outlets attract home owners who want to make their own improvements to their homes. The firm’s urban customers frequently buy from stores in cities like Cape Town, but arrange for their purchases to be collected at a rural store, in Thembalethu, a more rural location for example. This way money is sent home from the urban place of work.

Rural areas are seeing the benefits of social grants. In many house-holds asliceof the grant money is spent on alterations and additions to the family home. In the Northern Cape, for example, building activity rose by 86, 1%, when comparing the first quarter of 2012 with that of 2011.

Building activity in rural areas is being boosted by the government's infrastructure plan.With the promulgation of the Special Economic Zones Bill, government intends to develop multiple and geographically scattered pockets of industrial development. Even SMEs confirm that building activity in rural communities is increasing.

Unlike what has become conventional wisdom on the matter, cash-paying rural customers are sufficiently advanced to be discerning about what they purchase. There is just as high a level of appreciation for quality goods as one may find amongcity dwellers.

Building materials supplier Afrimat says contract values are diminishing. Three years ago, it was common to tender for contracts valued at between R800m and R1,5bn. Today, contracts are more commonly valued at about R100m, says CEO Andries van Heerden in a 2012 Afrimat Newsletter.One interesting observation is that lesser sizedcontracts result in more jobs. This is at one with government's plan to create jobs via infrastructure spend. 

Sadly on the down side, the Expanded Public Works Project has failed to direct money appropriately. To date very little government funding has found its way to its intended targets. Infrastructure projects have yet to reach their full potential partnering with private sector to uplift rural communities together in a complimentary and supplementary relationship.

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