Capital Equipment News August 2018

EDITOR'S COMMENT

JOINING HANDS TO HELP TOOL UPCOMING CONTRACTORS

T hat there is renewed focus on growing small, medium and micro enterprises (SMMEs) in South Africa is no overstatement. Government has prioritised entrepreneurship and the advancement of SMMEs as the catalyst to achieving economic growth. SMMEs are recognised as the building blocks of the country and, without their contribution, sustainable

growth cannot be achieved. For example, the vigour to drive SMME development in the construction contracting fraternity is very apparent, with the infrastructure project roll out programme very much designed to favour small and upcoming contractors. While construction contracts are modelled to promote upcoming contractors, challenges still abound for them, ranging from non-experience to lack of financial clout to purchase the equipment they need to execute the contracts. Year after year, upcoming contractors list access to funding as one of their most formidable concerns facing the future of their businesses. In most cases, small businesses are denied loans because of their limited operating history and low gross margins, among other factors. The truth of the matter is that often banks, especially in challenging economic times, have their appetite for risk at its lowest. It is encouraging to see that there are several role players in the industry working together to help close the financing gap for upcoming contractors. The approach is informed by the desire to see small businesses expand, and allow firms to take part in projects that will increase their competitiveness. A case in point is Sanral and Bell Equipment’s recent partnership to help tool upcoming road contractors. The national roads agency and the OEM recently signed a Memorandum of Understanding that will give CIDB-graded contractors access to earthmoving machinery which will enable them to participate more meaningfully in major construction projects. As part of the initiative, black-owned CIDB-graded contractors will now get access to finance,

leasing and rental options, training and maintenance services. The initiative is based on the understanding that awarding young contractors jobs without helping tool them is not sufficient for them to become serious competitors in such a fiercely contested industry. Both Sanral and Bell understand that access to various types of equipment used in construction remains the biggest hurdle facing start-up companies. I also recently attended an event where Regoapele Capital, an enterprise and supplier development partner to Glencore Lydenburg Smelter, handed over yellow metal equipment worth R8,5-million to a 100% black woman-owned company, Sicediwe, based in rural Lydenburg. Getting Sicediwe into business took concerted efforts from several role players, including Glencore (contract owner), equipment suppliers, Regoapele Capital and Masisizane Fund (the financier). Glencore and Regoapele Capital played a leading role in helping Mary Mkhabela, the owner of Sicediwe, get the necessary funding from Masisizane Fund to buy the equipment she needed to fulfil her metal breaking contract at Glencore Lydenburg Smelter. Their role was to prove to the financier that, despite the fact that the company had very limited operating history and low gross margins, it had secured a three-year contract which could give it a clean break into the industry, provided it got the necessary funding to get the equipment it needs to do the job. I believe that in future it is these sort of collaborative efforts and interventions that will ensure the viable growth and empowerment of emerging contractors.

Munesu Shoko – Editor

capnews@crown.co.za

@CapEquipNews

CAPITAL EQUIPMENT NEWS AUGUST 2018 2