JOHANNESBURG - The decline in government spending, together with its failure to pay contractors on time or even not at all, are among the main factors contributing to the decline of South Africa’s construction industry, an industry official said on Wednesday.
The government could do more to provide the stimulus the sector desperately needs, said Morag Evans, chief executive of Databuild, a knowledge hub for the construction and related industries which is acknowledged as a key source of intelligence for stakeholders.
"Government can begin by actually spending the funding that has been allocated in the national budget, specifically on new infrastructure such as roads, reservoirs, and low cost housing," Evans said.
"And while priority must also be given to areas such as health and education, hidden within these ministries is the need for the building of new schools, hospitals and clinics."
She said the maintenance of existing infrastructure should also be prioritised, with the large number of government buildings requiring urgent renovation just one example of how numerous construction projects could be generated to provide work for hundreds of people.
Evans cited the late or non-payment of contractors as one of the major causes of job losses in the construction industry.
"National Treasury regulations stipulate that contractors should be paid no later than 30 days after invoicing, yet a report issued by the Construction Industry Development Board states that 60 percent of payments are made after the 30-day deadline," she said.
"As a result, businesses incur severe financial difficulties, and many are forced into liquidation which leads to job losses. Consequently, government needs to work more effectively with private sector companies to improve the market."
The recent appointment of the Presidential Economic Advisory Council, the Investment Advisory Council and the State-Owned Enterprises Council should go a long way towards improving government and private sector interaction, she said.
Despite a sluggish economic climate, Evans was cautiously optimistic about the future of the construction industry, saying the improvement in business confidence between August and September was one of several signs that the market was beginning to turn.
“The steady flow of construction projects being put out to tender, of which many have been successfully awarded, also bodes well for the industry and we should soon start to see a further increase in momentum," she said.