The Construction Industry Development Board (CIDB) and the Small Business Services division of banking group Nedbank on Friday agreed to collaborate on assisting small and medium-sized enterprises (SMEs) in the contractor sector.

The two parties signed a memorandum of understanding to work together to provide business management skills training and mentoring to CIDB registered contractors, as well as to share information and advise SMEs seeking financial support.

Nedbank Small Business Services managing executive Sibongiseni Ngundze told Engineering News Online that the two partners were trying to overcome the developmental challenges faced by small contractors, as well as trying to ensure that they could bridge the gaps between contractors and financiers.

The parties indicated that few emerging construction enterprises were likely to meet the stringent conditions demanded for public and private sector projects.

These contractors often struggled in terms of high capital outlay requirements, project and business management capability, and in terms of capacity to deliver in volumes and to handle large projects.

Most of these challenges related, directly or indirectly, to an inability to access project finance and a lack of the required financial management.

Ngundze emphasised the importance of the SME sector for South Africa’s growth, noting that SMEs contributed significantly to the country’s gross domestic product and job creation.

The parties have agreed to jointly provide both financial and nonfinancial support to the small contractors.

CIDB construction economy programme manager Gerard Naidoo said that the parties would, in the short term, start an outreach programme to small contractors in all provinces of the country.

This would be made possible through both Nedbank and the CIDB's footprints, which stretched across all provinces.

The CIDB would provide SMEs with guidelines on appropriate procurement methodologies for registered contractors, while also ensuring participation in the national enabling framework including access to finance, training, mentoring and knowledge tools for contractors. 

Naidoo noted that the parties would aim to deal with all the issues experienced by small contractors, across the value chain.

The CIDB had similar agreements for collaboration with Absa, First National Bank and Standard Bank, as well as with organisations such as the Small Enterprise Development Agency and development finance institutions Khula and the Development Bank of Southern Africa.

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