Issues in construction industry highlighted at MBSA Congress 2017

Bonke Simelane, President of Master Builders South Africa.
Bonke Simelane, President of Master Builders South Africa.

Issues impacting the South African construction industry – and the country as a whole – came under the spotlight at this year’s Master Builders South Africa (MBSA) Congress, held on 11 and 12 September 2017 at the Century City Conference Centre in Cape Town.

Under the theme of Building South Africa Together, government representatives, building industry leaders, economists and other relevant stakeholders shared knowledge, information and new ideas during the challenging debates and thought-provoking discussions that characterised the Congress.

Kicking off the event, MBSA President, Bonke Simelane, stated: “At this year’s Congress, we seek to co-create the future, come up with solutions and put forward resolutions that enable us to contribute meaningfully and make a positive impact as a sector in the face of the country’s triple challenges of poverty, unemployment and inequality.”

Delivering the Congress’ Keynote Address, Minister of Economic Development, Ebrahim Patel shared: “A week ago, the economy emerged from the recession, powered mainly by the exceptionally strong performance of the agriculture sector. Nevertheless, there were some dark linings to this silver cloud – two sectors that, in the past eight years had driven economic growth and employment in an otherwise sluggish environment, experienced negative outputs in this past quarter. One of those was the construction industry, a major employer providing work for 1.4 million South Africans and a significant contributor to the country’s GDP.” He listed some of the challenges that the construction industry is facing such as reduced infrastructure spending by a number of state-owned enterprises, collusion, corruption, project delays, cost overruns and a lack of transformation.

Patel revealed some of the work that his department was doing to help bolster the sector and, in turn, the economy. This included consulting with National Treasury on the possibility of a multi-year budget system to mirror the build cycle of mega infrastructure projects and provide a level of certainty in the market. He also said that, despite softened spending, government is still outlaying approximately R280 billion per year on infrastructure and that this will be boosted further with the Minister of Finance adding increasing emphasis on infrastructure spend over the next two budgets. In addition, Patel reminded attendees of the opportunities presented for infrastructure development by urbanisation and growth within other parts of the continent.

Two lively panel discussions took place over the course of the Congress. The first, The State of the Construction Industry in South Africa, saw the topic of transformation take centre stage. The debate on whether the new Construction Sector Codes adequately address transformation gaps in the sector was a key focus. Thabo Masombuka, CEO of the Construction Sector Charter Council, said: “The Codes are only a blueprint through which the industry seeks to facilitate meaningful integration of historically disadvantaged communities in the mainstream economy. They are a minimum framework and should serve as encouragement for the industry to do more.” Gregory Mofokeng, General Secretary of the Black Business Council in the Built Environment, added that ‘doing more’ includes being serious about ensuring that the ownership of the industry rests in black hands. In terms of how the panellists believed transformation needs to advance, Mike Wylie, Chairman of WBHO Construction, stated: “Transformation must become part of daily life.”

During the second panel discussion, covering Industry Opportunities, Webster Mfebe, CEO of the South African Forum of Civil Engineering Contractors, said: “Any infrastructure investment in South Africa and Africa should not only leave behind physical infrastructure, but should also contribute towards national developmental goals, economic development, job creation, localisation and skills development. However, these opportunities will not be realised if there is no rollout of infrastructure by government, with there being a 35% decline in projects put out to tender and a 44% cancelation rate of projects in the first quarter of this year.” MBSA Executive Director, Roy Mnisi, stated: “We need to move away from just having endless discussions that are not accompanied by a serious commitment from government, the building industry and other stakeholders. Our solution lies mainly in our ability to consolidate and integrate our efforts. We, as MBSA, will continue to provide platforms like this Congress where issues affecting our industry are addressed.”

On the topic of Regional Integration for African Cooperation and Development, Thami Ngqungwana, Chief Director of the Economic Infrastructure and Logistics Unit at the Department of Trade and Industry, shared: “In Africa, underdevelopment is attributed directly to the lack of adequate infrastructure. While inadequate infrastructure may be the single biggest threat to Africa’s long-term growth, it also represents significant opportunities for the construction industry which can provide physical infrastructure assets such as ports, railway lines, toll roads, power stations, hospitals and broadband ICT.” In order for South Africa to take advantage of these and other opportunities, he called for large-scale public investment into infrastructure projects, the enhancement of private-sector participation, improvements in local production capacity and greater transformation within the construction industry.

Whilst unpacking South Africa’s Economic Outlook, Craig Lemboe, Senior Economist at the University of Stellenbosch’s Bureau for Economic Research, said that although the economy enjoyed significant growth in the first half of the year, it is unlikely to be sustained as the year progresses. He also noted that the construction sector faced two periods of decline, meaning that it is technically still in a recession and will experience more pain for the remainder of the year. Looking to the future, Lemboe predicts that GDP growth will remain flat, but that more meaningful growth is on the horizon in 2018, if risks are managed appropriately.

In her talk on Construction Sector Skills Development Programmes, Velile Ndlovu, CFO at the Construction Education Training Authority, highlighted some of the challenges affecting skills development in the industry. These include the country’s economic recession and/or ‘Junk Status’ leading to retrenchments in the sector, the reduction in public sector spending by up to 30% since 2008, the quality of tertiary education and the absence of technical studies in the schooling system. She also put forward solutions such as the implementation of Work-Integrated Learning programmes for learners seeking exposure to the sector, addressing low levels of education/qualification through Recognition of Prior Learning and industry stakeholders working with lecturers at Technical Vocational Education and Training colleges to improve the relevancy of what the next generation of construction industry members is being taught.

With the second and final day of the Congress coinciding with the 40th anniversary of the passing of Steve Biko, MBSA Deputy President, John Matthews, brought this year’s event to a close with a quote by the anti-Apartheid hero: “Change the way people think and things will never be the same.” He added: “I believe that we have done just that through the discussions we have had over the past two days.”

The 113th annual MBSA Congress will be taking place next year in Port Elizabeth.