THE building industry has blamed high price increases over the past year mainly on building material price hikes, some of which far exceed inflation.

A Cape Town trade mission to Angola has found that there are massive opportunities for local companies in the construction and manufacturing business.

Angola's economy has been destroyed by civil war for over than two decades and now is in a re-building phase.

Chris Nissen, president of the Cape Town Regional Chamber of Commerce and Industry, led the delegation of businessmen.

"The mission found that the urgent need was for houses, clinics and schools ... and this has opened up opportunities for local builders as well as suppliers of products like paint and building materials." 

Angola, which uses the US dollar in most of its business transactions, was concentrating on rebuilding the country's infrastructure, Nissen said.

"The delegates are planning more trips to forge partnerships and joint ventures with Angolan firms," he said.

Interest in Angola was confirmed by a chamber waiting list of some 20 delegates interested in follow-up trade missions. - 

Infrastructure is being run down.

South Africa is boosting spending on roads, railways and ports in a bid to get business moving after a decade of fiscal austerity.

The Airports Company of SA (Acsa) has projected expenditure of R2,7bn for infrastructure improvement and expansion for the period 2002-2007, Acting Transport Minister Jeff Radebe said yesterday.

Cabinet has approved has approved a five-year road infrastructure strategy

THE construction sector is confident that it will again experience good growth this year after a brisk last year that saw the sector expanding by 5,32%.

Government will spend about R50bn on construction projects over the next three years. This represents real growth of 12% a year for the sector, says Carl Grim, CEO of Aveng, SA's largest construction company. The federation ofcivil engineering contractors is equally upbeat, expecting nominal turn over from civil engineering alone to rise from about R16bn last year to R20bn this year.

Optimism in the sector stems from the expected decline in inflation and
interest rates, together with the recovery of the rand against the major
currencies and other factors.

SA's economy is expected to continue expanding at a rate of 3% a year.
"This growth would in part be brought about by government expenditure as
well as private investment, which will support growth in gross fixed capital
formation," says the federation's Pierre Blaauw.

"Prudent finances have culminated in a declining budget deficit which,
coupled with government's focus on infrastructure development, holds great
promise for the civil industry," Blaauw says.

Federation members were encouraged by increased tender activity in the
latter part of last year. However, Blaauw says underspending due to
institutional capacity problems is still preventing the full benefit of
rising government capital expenditure from trickling down to the industry.

The industry is planning a summit at which some of these issues will be
discussed. Meanwhile, some construction analysts have said that SA's rate of
capital expenditure is still not high enough to catch up on the country's
R170bn social and economic infrastructure backlog.

Stanlib Asset Management is bullish on the SA construction sector with the bulk of its funds substantially overweight in this area.

The fund manager has taken a strong view on companies such as Aveng, Murray & Roberts and Barloworld due to substantial investment in SA infrastructure.

The Stanlib quarterly market overview blamed the underperformance of its flagship Liberty Wealthbuilder fund on the funds mandate. Wealthbuilder has higher exposure to international companies than its peers and less exposure to medium and small cap companies, a sector which outperformed the market by 30% over the past year. International equities lost 28% over the same period.

Imtiaz Ahmed, the funds manager and head of multi manager clients at Stanlib asset management, said: 'The fund has underperformed, but has remained true to its benchmark. It does not subscribe to the latest investment fads. Other general equity funds have performed well because of their mid and small cap holdings, but there is greater risk involved with this strategy.' He said there would be 'two or three' interest rate cuts this year, and predicted that SA equities would outperform SA bonds over the year.

Paul Hansen, director of Stanlib retail investments, said it was unrealistic to expect the rand to stay at current levels through the year. 'For 14 consecutive years the rand lost value against the US dollar,' he said. 'The law of averages says this can't be sustained although the rand is an extremely difficult currency to make a call on.'

The Stanlib house forecast is for the rand to be at R10,75/ by the end of the year, which Hansen conceded looked a little unrealistic at present. 'The balance of probability is that the rand will be weaker this year,' he said.

Stanlib also outlined the time scale for the continued integration of Standard and Liberty businesses for this year. The group expected to complete its rationalisation phase this year, a stage which would include the unit trust conversion process and business process alignment, the fund manager announced.

Johannesburg - The industrial development zone (IDZ) in the Eastern Cape's second-largest city, East London, is well advanced, with two tenants already signed up and seven deals worth between R3 million and R3.5 billion under negotiation.

Management says new report is rehash of old, flawed reports.