The construction industry is calling on government to step in and intervene to help prevent the destruction of the sector in the country.
The call comes after construction engineering giant Group Five filed for bankruptcy protection last week, bringing the number of major construction companies to do so in less than a year to five.
Roy Mnisi, Executive Director of Master Builders South Africa says the association is deeply concerned with the matter and is calling on government to urgently step in to find solutions.
“This is the fifth large firm to succumb in less than a year. In 2018 alone, NMC Construction went into voluntary liquidation while Basil Read, Esor Construction and Liviero Group applied for business rescue. We still have many other small-medium sized firms facing financial difficulties and yet, there has not been any government-industry engagement to develop a plan to halt the trend,” Mnisis points out.
He adds that, the industry has continually engaged government on the adverse impact of late/non-payment of contractors for work completed but the matter remains unresolved.
“The decline has reached a very concerning level, so much that it is no longer a sectoral problem but a national crisis. We appeal to the government to open up to the industry and urgently find concomitant solutions to save it from a total collapse,” he says.
Other contributing factors
Mnisi however, acknowledges that there were other factors instrumental to the demise of the industry. These include a sluggish economy, reduction in ‘actual’ infrastructure spending by the government, as well as illegal and often violent work-stoppages at construction sites by various illegal forums.
The adverse impact of these company closures was severe, he notes. “The short-term effect is that direct employees of these collapsed companies lose their jobs. When you consider that the construction industry employs more than 11% of the workforce in South Africa, the negative impact on the economy as a whole is dire. There is also a knock-on effect across the industry because subcontractors, suppliers and service providers are equally affected.”
“In the long-term, we will lose our capacity to develop infrastructure and will have to depend on foreign companies in the future. That is why we are appealing to the government for engagement” Mnisi concludes.