SMMEs will take advantage of ‘big five’s’ demise in construction sector – CETA

Construction Education and Training Authority (CETA) accounting authority chairperson Raymond Cele says the demise of South Africa’s “big five” construction firms has brought about opportunities for small, medium-sized and microenterprises (SMMEs) to fill the gap in the market.

In an opening address at the inaugural CETA SMME Summit, in Midrand, on Thursday, he said the summit marked a new era for the training authority to embark on innovative skills development.

“Now is the time to change our approach and look at how we can support SMMEs.

“Coupled with that, we have witnessed a phenomenon in the industry [since mid-2018] – the emergence of a so-called ‘construction mafia’, which is a group that has been active in ‘destroying’ the construction sector. As CETA, we condemn this barbaric act and we urge government to act [against] this mafia.”

Reportedly, more than R25-billion worth of projects, or about 78 projects, across the country have been disrupted or halted by violent groups of people who are intimidating people on construction sites, demanding stakes in the projects.

These groups of people often disguise themselves as members from various business forums. 

Cele added that, notwithstanding the challenges that the “construction mafia” has brought about, CETA continues its focus on the challenges facing SMMEs, including insufficient support from stakeholders in the private sector, barriers to market entry and access to training and other opportunities.

In complementary fashion to President Cyril Ramaphosa’s economic stimulus package, CETA will support SMMEs to be able to participate in the stimulus package.

Following discussions with and suggestions by attendees at the summit, Cele hopes to improve and fine-tune CETA’s incubator system.

He stated the system had been incubating about 50 SMMEs, but CETA wanted to expand the system and include more SMMEs, while providing them with extended support beyond the incubation period. This would, however, require partnerships.

Department of Small Business Development chief director Nomvula Makgotlho suggested that cooperatives were the type of enterprises that should be approached in this regard, since they are established businesses with enough surplus to be able to support SMMEs.

She also mentioned that CETA should consider the challenges that SMMEs face with regard to the Construction Industry Development Board (CIDB), with “points” being necessary to allow the SMMEs to tender for bigger projects, but projects, in turn, being necessary to gain points, leaving SMMEs “stuck in the wilderness”.

Moreover, Department of Public Works chief director Ignatius Ariyo pointed out that SMMEs contributed 40% of business conducted in South Africa. In Europe, SMMEs contribute to around 90% of business.

He said the National Development Plan envisages SMMEs will create 90% of new jobs by 2030. However, most SMMEs fail within the first year, with only around 30% of them making it past the first year.

The revised Preferential Procurement Regulations specify that a third of a project’s work needs to be contracted to SMMEs, as soon as the project cost is higher than R30-million.

“The objective is to move SMMEs from CIDB grades 1 and 2, to at least grade 3 and higher, so that they can engage in different contracts put out by government. Over the next five years, we need to train 500 contracting entities,” Ariyo said.

He remarked that one of the biggest challenges that his department faced with regard to supporting SMMEs was access to mentorships and that funding from the department’s side aimed to facilitate mentorships for SMMEs to grow and sustain themselves.

Article supplied by Creamer media Engineering News

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