The Cape Construction Conference and Expo kicked off yesterday with a high-level panel discussion featuring key players in both the public and private sectors of the local construction industry. Chaired by Wesgro CEO Tim Harris, the public sector was represented by Donald Grant, MEC: Transport and Public Works, Bonginkosi Madikizela, MEC: Human Settlements, Alan Winde, MEC: Agriculture, Economic Development and Tourism and Lance Greyling, Director: Trade and Investment, City of Cape Town.
The construction industry is a huge player in South Africa, with Harris saying that R1 of every R20 in the economy is directly related to the building and construction sector. The sector also provides a million jobs.
David Metelerkamp, Senior Economist at Industry Insight presented an in depth overview on the state of the Western Cape construction industry. He pointed to a period of constrained government spending in the sector, compared to recent years, but said that the Western Cape was the province to be in for private construction projects for the next three years. With an increase in office and commercial space and an extremely healthy private housing market, the Western Cape can expect to outstrip national spend in the private sector by around 16%.
Areas with the highest infrastructure spend are up the West Coast as well as George. This is to be expected with the large infrastructure projects in the Saldanha Bay area.
Metelerkamp went on to say that the Western Cape’s leaders had an excellent track record in paying its contractors, with a mere 1.3% of payments being made later than 90 days.
There are very real concerns in the industry though, with skills development being a topic that was brought up time and again. Winde pointed to the fact that the average age of a Western Cape artisan is 55 years old, and the region is barely training 40% of the workforce that it will need in the medium-term.
Concerns on the quality of workmanship of government projects were brought up, concerns that Grant was eager to get details on so that his department could follow up on them.
The gap market
Madikizela spoke about the “gap market,” where lower income families where essentially “locked out” of the housing market. He used the example of a R7k pm family that where excluded from government housing projects because they earned too much, but would never be granted a bond from a financial institute. He suggested that this market is a key consideration for his department, and asked the private sector to consider the parameters it used in financing this market.
“The banks don’t finance anything smaller than the 45m2 houses that the government provides free, but if someone wanted to build a 30m2 house on a stand, why would this not be acceptable to the banks?” he asked.
When asked about the delays between awarding a tender and starting the build, Grant said that his department sees very little delays in the simpler projects, including maintenance and repairs, but felt that the delays and red tape around Public Private Partnerships (PPPs) were excessive. This is an issue that each of the departments represented said they were addressing and would continue to concentrate on.
Madikizela also said that many delays in the Human Settlements department’s projects were caused by community issues.
“The issues around housing can be very complex, and many times we are delayed time and again by different people in the communities we are working in bringing up issues. Many times the objections come from the people least affected by the project. It is something we have to tread carefully around,” explained Madikizela.
CBN asked both members of the panel and members of the audience whether they felt the discussion was a success. The panel laughingly said that it was more congenial than they expected, but felt that it is important to get a first hand account of problems facing the sector.
“There are a few people and issues I would like to follow up with,” said Grant.
One audience member summed up the comments from the audience by saying, “I am surprised by how candid the government representatives were. They were keen to address issues head on and didn’t gloss over the problems we face. I am very impressed and it gives me hope.”
By Jenni McCann