Building Success in Africa. (Spotlight Construction)
Ford, Neil, New African
On a continent with so many weak economies, the construction industry could be expected to be one of Africa's weakest sectors. But it is not. Growth rates in the sector of 6-10% are not uncommon and look set to be sustained over the coming decade.
Alongside the construction of new parastatal buildings and facilities for newly privatised companies, the pace of church and mosque construction in Africa continues unimpeded. Even many poor villages around the continent display recently built places of worship.
By far the biggest construction market in Africa (as in so many other sectors) is South Africa, where the industry is worth an estimated R50bn ($6.68bn) a year. But even here, the sector is facing a particular problem in terms of integrating new Black Empowerment Enterprises (BEEs) into the existing structure of established construction companies.
The organisation that represents BEEs, the National African Federated Building Industry (NAFBI), has complained that the established major players in the sector are exploiting the smaller BEE firms by cutting margins.
Aubrey Tshalata, the general secretary of NAFBI, claimed at the end of January that BEE contractors were being relegated to the periphery and appealed for an empowerment charter for the sector to protect smaller companies.
But a spokesperson for the Building Industries Federation of South Africa (BIFSA), whose members include construction giants such as Aveng, Concor, Murray & Roberts and WBHO, said that the organisation was not aware of exploitation taking place, but added that members could be expelled if the claims were proven. While the chief executive of Murray & Roberts, Brian Bruce--who is also the chairman of the Construction Industry Development Board (CIDB)--admitted that there had been a few complaints, he argued: "I certainly doubt whether the major construction companies are guilty of such behaviour."
It is difficult to discern whether NAFBI is merely trying to secure more work for its members, or whether there genuinely is a problem in the sector. Moreover, if there is a problem it is almost impossible to determine whether it is a case of the major corporations trying to squeeze out smaller firms, whether they are run by black or white South Africans, or whether BEE construction firms are coming under particular pressure. On balance, it seems safe to assume it is a combination of all these factors.
If BEE companies are to make inroads into the sector, they are obviously going to have to secure contracts that would previously have been won by other parts of the industry. It is, therefore, understandable that both large and small mainly white-owned firms wish to protect their market share. However, the situation may be eased by a general increase in the amount of work available. The preliminary results of a CIDB investigation into the state of the sector has revealed that rising capital expenditure is likely to unveil a lack of capacity in the sector.
The results, which were released at the end of April, highlight increased spending on construction projects in both the private and public sectors. An increasing proportion of government revenue is being used to build houses, schools, hospitals and other infrastructure in poor residential areas mainly occupied by black people.
Apart from empowerment, the major issue facing the construction sector in South Africa is the low quality of some new buildings. Bill Copeland, the director of the consultancy firm, Binnington Copeland and Associates, argues that increased competition has encouraged rapid construction and low prices, thereby threatening quality. "In our instant society," he says, "longevity does not seem to be important any longer. It would still be great to create buildings and structures that would stand the ravages of time and would one day be monuments to our current aesthetic and technological capabilities. …