Some SA building contractors threaten the future acceptance of local contractors in the rest of Africa

"arrogant attitudes and short-term thinking" by some south african building contractors threaten the future acceptance of local contractors in the rest of africa.

howard jones, md of grinaker-lta, was ringing the warning bell at the annual congress of the building industries federation south africa in magaliesburg last monday.

although there were major advantages in us dollar and other strong foreign currency payment, jones says south african contractors should be fully aware of the potential pitfalls in operating outside this country's borders.

"some of the major advantages often quoted, like superior profit margins, tax advantages, cost advantages as far as management and materials are concerned, relatively cheap labour and less emphasis on black economic empowerment - coupled with the feeling that 'south africans understand africa' - are to a large extent correct. but there is also a downside to be considered," jones says.

better profit margins, he says, inevitably mean higher risks. "your african operations will always end up costing more than you had budgeted for.

"it's also difficult to obtain the necessary work permits; currency fluctuations can also create havoc with your costing; and medical aid and pension expenses also could end up exceptionally high."

jones says taxation in african countries furthermore tended to be extremely complex with limited availability of, and access to, printed works of reference on the various countries' tax legislation.

"it's also vital to have the right management in charge in africa - but often the 'right' managers are not prepared to go. it can be a major mistake sending a manager motivated purely by financial rewards."

other pitfalls in the export of contractual skills include the logistics in procuring south african materials and spares for equipment.

grinaker-lta, for example, already had to wait five weeks for spares to arrive on a building site in mozambique.

transport costs also could be exceptionally high, bearing in mind that there is no meaningful air connections between the east and west coast immediately outside sa's borders.

african hotels also were extremely expensive with daily rates in, say, angola now on a par with switzerland.

"unfortunately, south africans also can be perilously short of cultural sensitivity when it comes dealing with african countries.

"time-keeping, for a start, is regarded totally differently and must be tolerated, while contractors who resort to bribery are definitely not being good ambassadors for our country. petty corruption causes major long-term problems."

finally, payment for work outside our borders tends to take a long time.

"it's not unusual to get paid four months after completing a contract. even upfront payments can take 128 days to be received," jones adds.