Master Builders calls for urgent government intervention to save the Construction industry

Master Builders calls for urgent government intervention to save the Construction industry

Master Builders South Africa is calling for urgent government intervention to prevent further destruction of the construction industry in the country. The call follows Group Five’s filing for bankruptcy protection last week, the fifth major construction company to do so in less than a year. Roy Mnisi, Executive Director of Master Builders expressed deep concern on the matter. “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.”

Roy Mnisi, Executive Director: Master Builders South Africa

According to Mnisi, 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 however, acknowledged 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 were severe, he noted. “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 concluded.

Master Builders South Africa (MBSA) is a Federation of registered employer Associations representing contractors and employers in the construction industry, and is regulated in terms of Section 107 of the Labour Relations Act 66 of 1995. The Federation’s nine Master Builders Associations, and three Affiliate Associations represent more than 4000 contractors and employers in the industry.

Our construction industry is healthier than many people believe

 
Our construction industry is healthier than many people believeMASTER BUILDERS NEW LOGO

 

It is therefore unfortunate and not unexpected that our attendance as well as media coverage of the Construction Summit held last week in Midrand has been drowned out and overtaken by other bigger national events beyond our control as alluded to above.

Bafikile Bonke Simelane, President, Master Builders South Africa

Bafikile Bonke Simelane, President, Master Builders South Africa

Our previous theme of “Courage and resilience in the face of adversity” could not be more relevant under these circumstances. It is therefore important that we do not lose sight of the positive intent and beneficial impact of the Voluntary Rebuilding Programme (VRP); and associated Declaration of Integrity (DoI) that was the predominant subject of the Construction Summit as a potentially strategic tool for the advancement of transformation in our industry/sector.
Master Builders South Africa affirmed its commitment to this new covenant as a blueprint and strategic road map for real, meaningful and sustainable transformation in our sector. While we acknowledge that it is not a perfect document, its foundational and ground-breaking aspects cannot be ignored. It is therefore up to all role players as well as all interested and affected parties to play their part in the realisation of its vision, objectives and “desired end-state” for the benefit of the industry as a whole.
We remain steadfast in our belief that the VRP together with the new Preferential Procurement Regulations and the imminent Construction Sector Charter Codes will deepen and accelerate transformation in the construction industry bearing in mind that transformation is a long-term project.
It was also heartening to read that the FNB/BER Building Confidence Index improved for the third consecutive quarter, rising by 3 points to 43 in 1Q2017, marking the highest confidence in more than a year. However, even though confidence improved, the current level of the index indicates that the majority (close to sixty per cent) of respondents are dissatisfied with prevailing business conditions. The investment downgrade will most certainly exacerbate this sentiment unfortunately.
This will no doubt undermine confidence in the public infrastructure build programme operating under the slogan “Turn South Africa into a Construction Site” considering that public expenditure accounts for about 55% of total construction expenditure. This is also against a 14% decline in total capital expenditure in 2016 by State-Owned Entities.
It was therefore somewhat reassuring to also read the findings of the inaugural Afrimat Construction Index which suggests that construction activity in South Africa is not as depressed as suggested by the media, large construction firms or industry analysts.
This study supports Afrimat’s argument over the last five years that construction is healthier than many people believed. This bodes well for the future despite recent political and economic setbacks by which we must not be overly panicked but remain resolute and focused; difficult as that may be under the currently over-charged political, social and economic environment of volatility, uncertainty, unpredictability, complexity and instability compounded by low growth.
I am reminded at this time of one of my favourite poems, “If” by Rudyard Kipling. “…If you can fill the unforgiving minute with sixty seconds’ worth of distance run…” Have a blessed and safe Easter. Let’s unite around Freedom Day to reclaim the promise heralded by the dawning of our new nation in 1994.

Bafikile Bonke Simelane

We need all hands on deck – Radebe

Master Builders South Africa Congress 2016 – Durban – 1 September 2016

We need all hands on deck

Honourable Minister Jeff Radebe, Minister in the Presidency

Honourable Minister Jeff Radebe, Minister in the Presidency

Keynote speaker at Master Builders South Africa Congress 2016 held in Durban in September, the Honourable Minister Jeff Radebe, Minister in the Presidency, unpacked aspects of the National Development Plan and highlighted the impact of infrastructure development and the vital role of the construction industry in driving the economy forward. The Minister stated that the economy was showing weakness and called on all industry stakeholders to ensure that they play their part in turning the tide.
“We are at a tipping point at this moment,” said Radebe. “And we call on government, all stakeholders in the NDP, all South Africans, including Master Builders South Africa – to ask what we have to do to change this deck of cards we have been dealt.”

The Minister spoke of Government’s Medium Term Strategic Plan (MTSF) 2014-2019 adopted in 2014 as the first step to implement the National Development Plan (NDP). He drew attention to the new procurement bill aimed to unlock the potential of SMME’s. Key points included the creation of employment through inclusive economic growth as well as the ongoing development of a skilled and capable workforce to support an inclusive growth path. The Minister stated that a strong focus on entrepreneurship was needed. He further noted that with the sector contributing R4 Trillion to the GDP, construction was pivotal to the economic future of the country and infrastructure development should drive meaningful B-BBEE and transformation.

The Minister announced the formation of a special unit in the Department of Planning to ensure that suppliers are paid within 30 days. He spoke of performance agreements for officials, accountability and consequences for late payment to contractors. “Defaulting officials will be legally charged,” said Radebe, to much applause from the audience.

The Minister also spoke of Government’s recently launched online procurement portal which facilitates the procurement of goods, services and construction works in a transparent, competitive and cost effective manner, in line with the Constitution and all relevant legislation.

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