Emerging Contractor Development through the Provision of Low-cost Housing in the Eastern Cape

Abstract

The construction industry is an economic stimulant and enabler of growth particularly in developing nations such as South Africa. The industry’s low entry barriers and the nature of work being labour-intensive attract emerging contractors. These contractors create jobs, upskill the community and transfer wealth to the previously marginalised. However, studies have shown that despite these several benefits, emerging contractors are prone to fail. Therefore, this research investigated the challenges facing emerging contractors and in addition, examined the low-cost housing programme. The positivism paradigm was adopted because of the nature of the research questions, its efficiency in the collection of voluminous data, and its perceived credibility by the policymakers. The collated data from 66 out of 173 contractors on the Eastern Cape Department of Human Settlements database were statistically analysed. The findings showed that most of emerging contractors are typically owned by a black male with a tertiary education, employ less than 20 employees, are capable of work worth less than R20 million and do not have a background in construction. The findings presented that the government was the primary employer of emerging contractors while some rely on subcontracting. Several contractors reported that they spent between 30 to 60 per cent of the contract value on materials. The start-up funds for emerging contractors are largely from family’s savings due to limited access to low- interest loans. During operation, the contractors heavily depend on monthly payment certificates to meet their expenses hence the importance of promptly settling these certificates. Emerging contractors receive training, it is largely from unaccredited mentors, which limits the upskilling of these contractors and leads to poor performance. The study then proposed possible initiatives that can employed for a progressive developmental programme based on the findings.