SMEs in construction can support Africa's growth

Small and medium enterprises (SMEs) in the construction industry face various challenges, such as lack of financial and technical capacity, lack of access to construction projects and information, and poor cash flow due to slow payment from government.

“However, the construction industry can help SMEs to overcome these challenges by assuming some of these burdens. In order to do this, the industry will need client bodies to support them,” says Frans Pienaar, chairman of Inyatsi Construction.

Pienaar would like to see incentives offered to business for helping SMEs. Business is, by definition, profit-driven and should SMEs have the potential to improve a larger company’s bottom-line performance, helping them will become a focus area.

Volatile markets

“With volatile world markets and the adverse influence on developing economies, it is important to overcome the challenges faced by SMEs in the construction industry. If we overcome these challenges, it will create employment opportunities, improved technology, better quality and service delivery and a large capacity base which can be mobilised at short notice should the market grow quickly,” he explains.

SMEs can support growth of economies in Africa and the rest of the world. With a very low overhead structure, these enterprises are ideally suited to be cost-efficient. Unfortunately, this can count against them as they struggle to get good deals from established business and cannot get the credit or the pricing that large businesses can arrange, Pienaar says.

He believes government should incentivise businesses to assist SMEs to ensure they also gain that competitive advantage. “Government and big business can also assist in ensuring SMEs obtain good deals in insurance and the financial markets. And government can ensure that projects run cash-positive to enable these enterprises to meet their commitments and build a track record that will contribute to a good reputation in the market.”

Source: BizCommunity

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