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A lack of progress on National Development Plan implementation is killing off South Africa’s construction sector and hampering economic growth.

This is according to construction industry association Master Builders’ Association North and comes after news that Group Five has filed for bankruptcy protection.

Musa Shangase, President of the Master Builders’ Association (MBA) North, says that the this has come as yet another blow for South Africa’s construction sector, following shortly after a disappointing 2019 budget speech that offered little hope of significant infrastructure investment in the foreseeable future.

Industry state of emergency

MBA North, which represents members in Gauteng, North West, Mpumalanga and Limpopo, says the construction sector has suffered several consecutive quarters of slow – and even negative – growth, creating a ‘state of emergency’ for large and small construction firms alike.

“While we understand the predicament the new Finance Minister is in, we believe the budget was not a visionary one. It cut spending on education, infrastructure and housing – all areas that could have boosted the ailing construction sector,” says Shangase.

“And it must be noted that infrastructure development is the cornerstone of the economic growth of this country.”

Same stumbling blocks prevail

Shangase says indications are that the same key stumbling blocks that emerged in recent years will continue to hamper growth in the construction sector. “The government is awarding fewer projects and has been slow to pay, which is crippling stakeholders,” he said.

“We’re seeing even large contractors facing business rescue and liquidation as a result, while for sub-contractors with no cash flow, the wait of 180 days or longer for government payment is devastating.” Another challenge, he says, is local business forums demanding a 30% procurement allocation on every construction project, usually leading to delays, costly training and a risk to project quality.

Workable solutions needed

Shangase says: “The Group Five news underscores the fact that the continued slow release of infrastructure projects and payments will impact the sector, with more major construction industries going into collapse if these problems are not given workable solutions.”

“In light of the infrastructure budget again being compromised and funds reallocated elsewhere, our concern is that we have fallen behind in terms of the NDP goals. If we want to achieve the growth goals envisaged in the NDP, we need to invest in infrastructure development now, he adds.

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