At this year’s State of the Nation address (SONA), President Ramaphosa once again emphasised the need to shift state expenditure from debt servicing to infrastructure and other forms of productive activity likely to create growth and jobs. He also announced that the funding available for infrastructure had ballooned from R100 billion to R700 billion. But, says Mohau Mphomela, Executive Director, Master Builders Association (MBA) North, these plans are not translating into projects with sufficient rapidity.
“For the past three years, the President has used SONA to announce the need to revitalise the economy and the key role that infrastructure will play in that process. Although there has been a series of consultation between the construction industry and government, few tangible projects have resulted,” he says. “The fact is that the past three years has seen several of our leading construction firms going into business rescue or going out of business entirely: big infrastructure plans are not translating into work for the construction industry.”
Group Five, Basil Read, NMC Construction, Esor and the Liviero Group are just some of the big names who have had to file for business rescue or declare bankruptcy in last few years. These companies in turn support a wide range of smaller contractors which collaborate with them on massive projects. These sub-contractors not only employ thousands of people, they also represent the next generation of empowered businesses.
For example, according to the IDC, the construction sector has shed some 142 000 jobs and its employment figures are at a four-year low. MBA North points out that as one of the foundational industries of any economy, the construction industry has a significant multiplier effect on the economy as a whole. For example, in the United States, for every 100 direct jobs, the industry supports a further 226 indirect jobs – the same sort of ratio is likely to hold for South Africa.
“Creating jobs, especially for our youth, is a burning priority for government, and construction offers one of the most reliable and direct ways of doing that. Government needs to find ways of translating its ambitious infrastructure plans into actual projects. Since SONA 2019, the Infrastructure Fund implementation team has got no further than finalising a ‘list of shovel-ready projects and has begun work to expand private investment into public infrastructure sectors with revenue streams’, to quote the President,” Mphomela says. “With all due respect, this glacial pace is simply not good enough. The industry is tottering.”
Another worrying development is the fact that CETA, the body responsible for administering the funds contributed by the industry towards training, is under administration for the second time in 10 years. This means that the industry is not upskilling its people as efficiently and quickly as required for today’s advanced construction techniques.
“The President and his team are doing a great job in raising the investment to fund the infrastructure we need to put in place, but now they need to speed up the implementation,” he concludes. “I think I speak for the whole industry when I say that we are committed to working with government to get these projects completed, but we must emphasise that the clock is ticking for us. We need action, and soon.”
Article Source: https://www.crown.co.za