Standard Bank has joined forces with construction materials group Massbuild to provide a R20-million credit facility for select black economic-empowerment (BEE) building contractors, aimed at enabling them to establish sustainable businesses and improve their ability to deliver as preferred suppliers to government.

The credit facility was an initial pilot that would see Massbuild supplying building materials on credit to ten preselected BEE contractors which provided building services to government for community upliftment projects ranging from low-cost housing to libraries and hospitals.

Massbuild owns and operates South Africa-based construction materials retailers Builders Warehouse, Builders Express and Builders Trade Depot.

Standard Bank’s portion of the funding would go toward meeting the working capital requirements of the contractors, who were largely unable to obtain funding for these types of projects.

In addition, the parties had appointed Tusk Construction Support Services to provide technical and operational assistance to the contractors.

The successful candidates would also receive 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 franchising and enterprise development head Simone Cooper said the partnership with Massbuild aimed to promote sustainability among small business owners in the construction industry.

“We want to create an environment that supports emerging building contractors and their continued ability to supply critical services to government,” she commented.

Standard Bank and Massbuild said in a statement on Wednesday that they were likely to expand the total size of the credit facility and the number of participating contractors once they had evaluated the success of the initial pilot.

Apart from the primary goal of ensuring the viability of emerging building contractors, who typically bought 65% of their building supplies on credit, the parties also hoped to make a positive contribution to job creation and entrepreneurship.

“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 wellbeing of small businesses.

“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,” said Massbuild financial services head Andrew Latimer.