Seda construction incubator gives contractors R1bn leg up

durban - at least 20 emerging contractors will be given a leg up by a new construction incubator that will enable these small businesses to bid for at least r1 billion in contracts.

mthunzi nyandeni, chief executive of the small enterprise development agency (seda) ethekwini construction incubator, said last week contractors selected for the incubator would be assisted to bid for contracts related to public works, transport and schools.

the ethekwini municipality will spend about r2.5 billion on 600 capital projects in the 2006/07 financial year. thirty percent, or about r1 billion of this, will be ring-fenced for emerging contractors.

there will also be opportunities in property development, ports and the new airport.

seda will support the incubator with r2.5 million in funding a year, while the ethekwini municipality has built a r6.2 million building where office space will be available.

part of the building is leased to tenants, enabling the incubator to pay municipal rent.

seven emerging contractors, experienced in civil work, have already been selected. three of these are women.


a further 13, which will have electrical and building skills, are being chosen. the applicants have been chosen through an advertised selection process that stipulated a financial grading of 2 or 3.

the construction industry development board grading from 1 to 9 stipulates what size contract a firm can undertake.

grade 3 and 4 can take on contracts with a maximum value of r500 000 and r1.5 million, respectively. the 20 applicants, to be incubated for three years, are expected within 18 months to have risen a grade. the aim is that by the end of the programme, they will be ranked grade 5 or 6. this means they will be able to undertake work valued up to r5 million or r10 million, respectively.

"with only 10 percent of previously disadvantaged contractors above grade 3, it appears they stagnate at the grade 2 and 3 level," nyandeni explained.

"most of these guys operate from the boot of their cars. we are giving them a formal space. during the induction process, we will do a skills analysis to identify gaps."

these contractors will be supported by mentors selected through an advertised process.