International credit insurer Coface said on Monday that the construction industry is facing one of the most difficult periods in the last 10 years, and is not showing any signs of recovery.

Coface building and construction analyst Jayson Naidoo pointed to recent statistics, which in fact revealed that the industry growth indicators have been declining since third quarter of 2009 and that the industry has one of the lowest growth figures since early 2008.

"This is contradictory to most other industries which have shown signs of recovery in recent months," he said.

Coface said that companies in the construction industry are split into two distinct sectors, the first being large corporates who deal mostly with government and infrastructure based

projects, and SME construction businesses that are mostly involved with residential property construction in the new housing and renovations sectors.

"Both of these segments have been severely affected in the last year, but for different reasons," the group said.

"From a large corporate perspective, many of the construction project for the Football World Cup were completed by the end of 2009, with finishing touches such as seating, etc being completed in 2010.

"The large construction companies involved in these projects will have invoiced the various government departments by the end of 2009, and are likely to have received payment in July, August 2010.

"This is due to the extensive payment processes involved in dealing with government departments," Naidoo said.

Coface South Africa said it had experience with clients whereby payment for work could take as long as 6 to 9 months due to the different mandate levels within government departments for sign off.

Inevitably the construction company is paid, however the process for payment will have hindered cash flow, and as such hindered growth into new projects.

"In addition to this, many of the additional infrastructure projects government will be implementing were put on hold for the first 6 months of 2010 while all resources were concentrated on ensuring a successful 2010 Football World Cup," Coface said.

According to Naidoo, the planning and tender process has only been restarted in July 2010 and as such new mega- projects such as the schools, hospital and low cost housing projects are not yet in production.

Coface South Africa said it expects the large construction companies' growth measurement to pick up in 2011 as the new infrastructure projects come on line.

"In terms of the SME construction market, the slowdown in consumer's access to credit and cash flow, along with concerns around job security, is directly related to the demand for new houses.

"While the interest rate is favorable, the access to credit from the banking sector has remained stringent," said Naidoo.

"A positive indicator for this industry is the upturn in building plans passed since April 2010, although the number of plans passed remains at the lowest levels in three years," he said.

Coface said that the improvement within this sector of the construction industry is directly related to improved spending within the consumer market.

"This market is expected to remain flat for the next 6 to 12 months, as consumers adjust to more austere market conditions," Coface said.

In July the group said that the local construction industry had been hampered by a 'wait and see' approach over the first six months of the 2010.

Naidoo had highlighted governments' R846 billion infrastructure budget as a feature going forward.

Infrastructure spending on economic services, including the provision of electricity, roads, pipelines, bulk infrastructure for water and sanitation and housing, would account for 85.3%, or R720 billion of the R846 billion spend, while 11.3%, or R93 billion, of the total would be spent on social services, including schools and hospitals, he said.

The group noted that the residential sector remained slow, with no real movement over the first six months of 2010.