By: Nosive Ngcawe - Development Action Group Project Officer

The launch of the R300 million Construction Fund by the Small Enterprise Development and Finance Agency (SEDFA), in partnership with the Construction Industry Development Board (CIDB), has been widely welcomed across South Africa’s construction sector, and rightly so.

Access to finance remains one of the biggest barriers preventing emerging contractors from growing their businesses and participating meaningfully in infrastructure opportunities. Many contractors have the technical skills and experience to deliver quality work but remain excluded because they cannot access the finance needed to scale up their work.

At the Development Action Group (DAG), through our Contractor and Developer Academy, we work closely with emerging contractors across communities and have long advocated for stronger developmental and financial support within the sector. Our programmes support contractors with technical training, business management, compliance, and enterprise development aimed at strengthening their participation in the built environment economy.

Yet one message consistently emerges from contractors participating in our programmes:

“We can do the work, but we cannot access the finance.”

Many emerging contractors operate within highly unstable economic conditions. Some experience long gaps between projects, while others face delayed payments that severely disrupt already fragile cash flows. Many lack formal credit histories or sophisticated financial systems, not because they lack capability, but because the environments in which they operate make long-term business stability extremely difficult.

This is precisely why the Construction Fund matters, and why CIDB’s partnership in the initiative is so significant.

For too long, many smaller and township-based contractors have experienced CIDB primarily as a regulatory and compliance authority. Regulation and standards are essential within the construction sector, but regulation alone cannot transform the industry.

The “D” in CIDB matters too.

Beyond a construction regulator, South Africa requires robust developmental institutions dedicated to supporting the growth and long-term sustainability of emerging contractors. This partnership between SEDFA and CIDB signals an important recognition that real contractor development requires more than compliance. It requires integrated support, including finance, mentorship, enterprise development, procurement access, and practical business assistance.

This is especially important in a country where infrastructure development is repeatedly identified as a key driver of economic growth and job creation. If emerging contractors are not meaningfully included in this economy, transformation within the sector will remain limited.

At the same time, the long-term success of the Construction Fund will depend heavily on its design and implementation. While detailed funding criteria are still to be released, it is essential that the realities facing emerging contractors are carefully considered. If the fund applies purely traditional commercial lending approaches, many of the businesses it aims to support may remain excluded.

A contractor who has gone several months without projects may not present strong bank statements. A small township contractor may not have an established credit history or sophisticated financial systems. Yet these realities should not automatically disqualify businesses with technical capability and clear development potential.

The Construction Fund therefore needs a developmental and sector-sensitive approach to risk assessment and business support. If inclusion is truly the goal, consideration should be given to project-linked finance, phased funding, mentorship, alternative contractor assessments, and integrated business support mechanisms.

Developmental support should not be mistaken for lowering standards. Rather, it is about building stronger and increasingly sustainable enterprises capable of contributing productively to South Africa’s infrastructure economy.

There is also an important opportunity for SEDFA and CIDB to work more closely with intermediary organisations and sector partners that understand the operational realities facing emerging contractors. Construction businesses often operate within highly specialised and project-based environments where income streams can be irregular and heavily influenced by procurement delays and payment practices.

Organisations involved in contractor development, enterprise support, incubation, and local economic development can play an important role in identifying high-potential businesses, strengthening financial capability, providing mentorship, and helping contractors successfully navigate funding processes.

The launch of the Construction Fund is therefore an encouraging step in the right direction. But its success will ultimately not be measured only by the amount allocated. It will be measured by whether emerging contractors, particularly those historically excluded from mainstream opportunities, are genuinely able to access, utilise, and benefit from the support being offered.

South Africa’s construction sector cannot grow inclusively if smaller contractors remain permanently stuck at the margins. The Construction Fund offers an important opportunity to change that, if implementation remains grounded in the lived realities of the contractors it seeks to support.