Market Assessment

World Education Ntinga South Africa, USAID, 2002

    World Education (WE), with funding from USAID, conducted a national sector scan to identify high potential sectors for implementing a business linkages program that would expand latent demand for and availability of quality services, particularly market links and procurement, to under-served micro and small enterprises. The construction sector led in terms of potential and prospects for a targeted, market-led linkages intervention.

    WE then commissioned a phased, subsector/ market assessment study of the construction sector. Phase one resulted in a map covering the overall structure of the sector, the role players, and their functions and interactions. The second phase comprised an in-depth study of the policy environment, opportunities, constraints, and relationships between large and small firms. The study also asked SEs and BDS providers how a business linkages support program could help them access opportunities or assess the potential for specific services.

    Methods for info gathering
    Secondary source research, Key informant interviews, Focus group discussions, In-depth interviews, SE surveys

    Summary of results
    - The construction sector, a key contributor to the country's gross domestic product, has many role players in the public and private sectors and various, often poorly coordinated policies and initiatives. The vast majority of contractors are micro or very small.

    - Sector products are civil works (infrastructure), building (residential and non-residential), and installations and maintenance (which offer SEs the easiest access to opportunities.) Implementation of affirmative procurement policies and backlogs in urban renewal and rural development initiatives, housing, maintenance, and infrastructure are expected to open up opportunities.

    - SE contractors learn about contract opportunities from newspapers and other tender information sources, but most have trouble accessing and executing work.

    - Major constraints are limited bid preparation skills; poor understanding of contract management; and lack of: basic business management, marketing, sales, and negotiation skills; collateral and access to finance, inputs, and materials; and performance capacity. Most SEs think BDS can help them overcome these problems.

    - SE contractors learn about/access BDS from consulting firms, business organisations, and SE support agencies. Better-performing SEs purchase services from commercial sources. Most SEs are satisfied with BDS from commercial sources.

    - Most commercial BDS suppliers provide project management, technical/ professional services, business training/ consulting/ mentorship, and tender information/ advice.

    - Surveyed firms used quantity surveying (estimating and quoting prices) most often.

    - The majority of commercial BDS providers serve medium-sized firms and work only in urban and peri-urban areas. Few work in rural areas or with SEs.

    - The main sector risks identified by BDS suppliers include political interference and the inability of small firms to compete against large ones.

    Associated Activities and Documents
    »Building Business Links in South Africa's Construction Sector, World Education, Jan 2005