Belo Transact’s Lovemore Mohlaba says that small contractors need an iron will and strong work ethic to survive.
Belo Transact is currently involved in a major refurbishment of the gym at a tertiary institution in Gauteng
Belo Transact offers a full range of maintenance, refurbishment and construction services for existing commercial buildings. Services include renovation and maintenance of buildings, electrical work (including certificates of compliance and uninterruptible power supply), and plumbing (including the refurbishment of commercial bathrooms). Its core team is about 15 strong, but is supplemented by partners for big projects.
The company has been in existence for eight years and, says Mohlaba, has the expertise to tackle virtually every job needed to refurbish commercial, high-traffic properties – even down to the creating of roads and kerbs for office or residential complexes.
Mohlaba says that the company has done a lot of work for universities in order to upgrade existing facilities. “The opportunity cost of capital is high, so refurbishment makes a lot of sense as opposed to a total rebuild,” he says. “Refurbishment is a way of prolonging the life of the original investment without incurring massive new capex, and yet maintaining a fresh, contemporary feel.”
Talking about the current project, Mohlaba says that this and other projects are currently plagued by a shortage of materials – for example, acoustic tiles and many fittings, such as urinals and electrical controllers, have to be imported and there is simply no stock in the country. A related factor is the well-publicised de-industrialisation of South Africa, which sees our capacity to manufacture goods declining. A recent blow was the closing of Cobra Taps’ local production facilities, so this South African brand is now manufactured elsewhere and imported.
Stock shortages are compounded by unreliable delivery times, which in turn impact project timelines more than somewhat.
Perhaps a more pressing problem is that smaller companies are crippled by a lack of the working capital they need to complete projects on time, and banks and the financial sector as a whole simply do not have a solution for them. The cost of borrowing using conventional loans is simply too high for the construction industry’s thin margins.
Mohlaba is a committed member of the Master Builders Association North, and sees it as perfectly positioned to play a key role in helping address many of the issues faced by smaller contractors. One issue is the red tape that continues to stifle entrepreneurial activity, despite repeated government promises to reduce it.
He also believes that MBA North could play a useful role in helping resolve the two issues noted above. On the one hand, it could help lobby banks to come up with a solution that would make working capital available on the right terms, while on the other it has the heft to initiate efforts to address the supply chain issues.
In conclusion, Mohlaba says that smaller players in the construction industry, like Belo Transact, face several key challenges. For a start, they need to be very committed because, on his estimate, one is only successful in winning tenders 5% of the time. “You need to be able to deal with rejection,” he concludes ruefully. He believes that one challenge is that many entrepreneurs are unable to articulate their value propositions effectively, thus lessening their chances of clinching the deal.
“At the same time, though, many of the big companies are not ready for working with start-ups,” he adds. “It’s important this changes as start-ups and smaller companies are the key to solving our unemployment problems.”