<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
SIMON BROWN: I\u2019m chatting now with Thethe Mokele. She is managing senior associate at Pinsent Masons. Thethe, appreciate the early morning time.<\/p>\n
Research on the construction sector within South Africa shows that from 2008 to 2025, as a slice of GDP it has gone from 4.2% to 2.3%. That is a significant shrinking of an important sector in our economy \u2013 not just in terms of obviously building infrastructure, but in terms of employment.<\/p>\n
THETHE MOKELE: Good morning, Simon, and thanks for having me. Definitely. A sobering statistic. But it has been interesting to see how the industry has adjusted in restructuring overall.<\/p>\n
So these stats, while important, are reflective obviously not just of the construction sector, but the economy generally. So in times of slow economic growth you kind of expect a statistic like this.<\/p>\n
But, like I said, the positive has been the restructuring \u2013 how these small to medium enterprises have basically come in and almost filled that gap that was historically filled by the super construction companies on these large mega projects.<\/p>\n
Read:
Building and construction sector poised for better days?
SA construction sector shows some promise
SA GDP surprises to the upside as headwinds build<\/p>\n
The small to medium enterprises have found a shoo-in and they are really making inroads; they\u2019re contributing to the economy, they are employing people, which is important. So yes, definitely sobering.<\/p>\n
But on the flip side, it has \u00a0almost given these smaller entities that generally wouldn\u2019t have been able to participate a way to participate and contribute meaningfully to our economy.<\/p>\n
SIMON BROWN: That makes a great point, because I\u2019m sitting here and I\u2019m thinking of all the listed construction companies that have disappeared and gone into business rescue over the last five years or so. There have \u00a0been a lot of them. The rise of the small construction [groups] makes a lot of sense.<\/p>\n
My question then is: Do they have the depth of skill and the like, or are they sort of doing joint ventures \u2013 perhaps locally, perhaps even with international entities \u2013 to help some of those resources, some of this expertise?<\/p>\n
THETHE MOKELE: Some of them have been around for a while, so the experience is definitely there. It\u2019s just a matter of tapping into slightly larger projects.<\/p>\n
And then on the other side are the relatively newer small to medium enterprises \u2013\u00a0 and that\u2019s where this joint-venture model that you speak about comes into play and becomes quite effective.<\/p>\n
So we see it a lot with local-to-local joint-venture models, and we also see it a lot with international \u2013 sometimes Chinese entity \u2013 local joint ventures.<\/p>\n
What that allows both parties to do is to leverage with each other. So you\u2019ve got the small and medium enterprises who are on the ground.<\/p>\n
They can provide the local labour, the resources. They\u2019re closer to community issues. They\u2019re closer to the community and can get that buy-in from the community \u2013 and in the larger entities bring the money muscle.<\/p>\n
They bring more expertise, more advanced technology, and that allows that skill-sharing and transfer, so that even those smaller entities are then left with something that they can use going forward in other projects \u2013 and hopefully bigger projects \u2013 going forward.<\/p>\n
Read:
Inside South Africa\u2019s most remarkable corporate turnarounds
Localisation lifeline: Can manufacturing rescue SA\u2019s jobs crisis?<\/p>\n
SIMON BROWN: That was exactly going to be my next point. We actually get a benefit from it. I\u2019m always reminded that every large company was once a small company, and the small construction companies can grow. We get that transfer of skills, of knowledge, which we then have as a country, as a small construction sector.<\/p>\n
THETHE MOKELE: That\u2019s exactly it. So yes. It\u2019s a win-win for both.<\/p>\n
SIMON BROWN: Yes, hugely important.<\/p>\n
THETHE MOKELE: A win-win for both sides.<\/p>\n
SIMON BROWN: The important part here, of course, is government as a sort of important leg in terms of a contract, in terms of funding, in terms of helping drive the sector as well. Are they playing their part? Are we seeing activity coming from government into the sector?<\/p>\n
THETHE MOKELE: We are seeing quite a lot of activity in the government sector just trying to source that funding. But I think it would be a huge burden for them to carry on their own.<\/p>\n
So what I think they need to focus on, in addition to trying to almost front-load the initial stages of the projects, is to de-risk those initial phases, to make sure that the projects get running, get going \u2013 without unnecessary bottlenecks or red tape.<\/p>\n
That you have the necessary regulatory frameworks that facilitate whatever permits, licences, et cetera are required.<\/p>\n
From a contracting side you ensure as much as you can that there\u2019s almost a ring-fencing of funds, because that\u2019s another stumbling block for some of these smaller, more inexperienced contractors.<\/p>\n
Read:
Day of reckoning coming for non-performing construction contractors
We\u2019re turning the tide against the construction mafia \u2013 Macpherson
Investors go all in on Ramaphosa pledge to rebuild SA
Draft regulations to address construction mafia criminality<\/p>\n
Once that money hits, it goes elsewhere and not necessarily to the project. So if you can de-risk that initial stage with the initial government involvement and funding, make sure the regulatory frameworks are in place, I think then you start winning more private-sector investor confidence.<\/p>\n
They have the confidence to then come in off the back end and fund and hopefully see the projects to completion.<\/p>\n
I think it would be a big task for government alone, but if they can get that initial stage right, then you\u2019re more likely to get more buy-in from the private sector.<\/p>\n
SIMON BROWN: I like that. Government almost as a leg-up in a sense and a leg-up in a positive sense, rather than a negative.<\/p>\n
We\u2019ll leave it there. Thethe Mokele, managing senior associate at Pinsent Masons, appreciate the early morning time.<\/p>\n
#SMEs #reshaping #construction #industry<\/p>\n","protected":false},"excerpt":{"rendered":"
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