Ten black building contractors have kinda struck gold after being selected to benefit from a R20 million credit facility organised by Standard Bank and Massmart subsidiary Massbuild.
The two companies announced yesterday an initiative to provide a R20 million credit facility for select BEE building contractors. They said the initiative is aimed at enabling the contractors to establish sustainable businesses and improve their ability to deliver as preferred suppliers to government.
Those who know the contracting business will tell you that such a credit line is a critical factor because this line of business can be capital intensive.
Yesterday’s announcement said the credit facility is an initial pilot that will see Massbuild supply building materials on credit to 10 pre-selected BEE contractors providing building services to government for community upliftment projects ranging from low-cost housing to libraries and hospitals.
Standard Bank’s portion of the funding will go toward meeting the working capital requirements of the contractors, who generally are not able to obtain funding for these types of projects.
“Our partnership with Massbuild aims to promote sustainability among small business owners in the construction industry,” said Simone Cooper, Head of Franchising and Enterprise Development at Standard Bank. “We want to create an environment that supports emerging building contractors and their continued ability to supply critical services to government.
An important component of the initiative will be the technical and operational assistance provided to the contractors by Tusk Construction Support Services. The contractors will get practical support in delivering on their contracts with government, encompassing basic cash flow management, project costing, supply chain management, and the provision of on-site project managers.
Standard Bank and Massbuild are adopting this new approach to enterprise development, which absorbs billions of rands in corporate budgets every year, to drive the long-run sustainability of more small businesses in South Africa. A comprehensive enterprise development solution that encompasses funding, supply chains and business support is also a key component of promoting Black Economic Empowerment.
Standard Bank and Massbuild are likely to expand the total size of the credit facility and the number of participating contractors, once they have evaluated the success of the initial pilot. Apart from the primary goal of ensuring the viability of emerging building contractors, who typically purchase 65% of their building supplies on credit, Standard Bank and Massbuild also hope to make a positive contribution to job creation and entrepreneurship.
“What is commendable about this partnership is that Standard Bank and Massbuild have recognised the need to appoint a professional support service provider like Tusk to help equip emerging building contractors with the fundamental business acumen they will need to operate their businesses on a sustainable basis,” says Pieter de Villiers, Director of Corporate Services at Tusk Construction Support Services.
“You can’t just throw money at small enterprise development. You also have nurture businesses and more importantly, you have to teach emerging entrepreneurs how to help themselves so that they are able to continue operating independently.”
“As a major retailer, Massbuild recognises the need to implement an enterprise development solution that links financing with preferential procurement and support programmes to promote the long term commercial well-being of small businesses,” says Andrew Latimer, Head of Financial Services at Massbuild. “The ultimate success of this initiative will be in the number of small businesses we are able to graduate to sustainable, profitable entities in the long-run.”