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ACTION NEEDED NOW TO RESTORE CONSTRUCTION INDUSTRY 

Confidence in the construction industry has been erratic since 2020, compelling several industry players to close their doors. Those that remain are exposed to risk, vigilante action and skills shortages due to mass emigration. Government’s stated commitment to making regulatory changes and spending on infrastructure do, however, provide some light at the end of the tunnel. 

“The industry needs a major boost to regain the prosperity of a decade ago,” says GVK-Siya Zama CFO, John de Sousa. “Much needs to be done to improve investor confidence and boost the industry. Here, the government has a major role to play. The finance minister’s announcements at the recent budget speech bode well for the industry – if they play out according to plan.”

De Sousa’s comments come as GVK-Siya Zama’s marks its 30-year anniversary since inception in 1994, coinciding with the birth of democracy in South Africa. Since then, it has evolved into one of the largest privately-owned construction companies in the country.

The company’s roots, however, can be traced back to the 1960s when it operated as a painting and restoration company focused on smaller projects. Over the years, it grew into a significant player in the construction industry, successfully taking on larger and more complex projects.

Today, GVK-Siya Zama’s work has shifted from the highly aesthetic restoration projects of the past, to being part of the construction machinery involved in creating healthcare and education facilities in response to a considerable backlog, underpinned by a growing and a shifting population.  

De Sousa, says the advent of a democratic South Africa held much promise three decades ago, albeit with many unknowns for investors at the time. “It also presented an opportunity to address and redress inequality in terms of infrastructure and services; and along with that change, shift the emphasis in public spending.

“In those early days, there was a major drive by the government to invest in infrastructure, hospitals, education facilities and the type of projects that would cement the leadership’s foothold in the country. This focus was unfortunately at the cost of unseen infrastructure such as pipelines and reticulation, roads, bridges, water and electricity, challenges that the country is now having to deal with – 30 years on,” he adds.

Government’s proposed regulatory amendments for PPPs welcomed 

De Sousa says the state needs private sector participation to accelerate projects. “Any vehicle or relaxation of rigid structures and requirements – such as the government’s intention to amend the public-private partnership (PPP) regulatory framework – will help to reduce procedural complexity of undertaking PPPs and contribute to more streamlined delivery of projects.”

In addition, government’s recent budget speech announcement that it plans to invest more than R943 billion in the refurbishment and maintenance of existing assets and the building of new public infrastructure is welcomed by GVK-Siya Zama. 

Commenting on this, de Sousa says: “This is a promising move by government, and we’ll watch the space with keen interest.”

De Sousa says the company applauds government’s plans to transform municipalities into engines of growth through the tightening of budget processes, ramping up of oversight, increasing skills and capacity of municipal employees, and driving investment in maintaining and building infrastructure. 

“It’s no secret that in recent years, municipalities have not been great at managing finances and delivering projects. Any focus on municipal governance and the eradication of corruption and ineptitude will go a long way towards addressing these challenges,” notes de Sousa.

Moving the industry forward requires decisive action

Looking at the sector as a whole, he says there is enormous pressure on the private sector to finance and move projects forward. “On the flip side of the coin, there is counter pressure from labour as government considers the privatisation of state-owned entities (SOEs). Government is in a bind. It knows what needs to be done, but dealing with these opposing forces on the ground inevitably slows the process down. Decisive action is, however, needed to ensure a sustainable industry,” adds de Sousa.

He says economic growth, population growth, increasing unemployment and shrinking public sector spend place even the most reputable contractors in a precarious position. 

“At GVK-Siya Zama, we will continue to strive for a sustainable company that provides employment, trains and develops employees, contributes meaningfully to the built environment and turns a profit – we will continue to carry the construction flame high and work with all stakeholders to ensure the industry’s longevity in the country,” concludes de Sousa.