Corporate & Commercial Law
Payment delays: the existential threat to South Africa's construction industry
South Africa’s construction sector is navigating a precarious moment marked by persistent payment delays, growing international competition and a worsening skills shortage. Yet industry leaders say the sector remains cautiously optimistic about emerging opportunities in infrastructure, energy and commercial property.
Source: Supplied. Euan Massey, director at MDA Attorneys.
This sentiment emerged during the Constructor’s Forum panel discussion at Collective Wisdom 2026, hosted by construction law specialist MDA Attorneys. Speakers described an industry that has lost several of its largest players and is often forced to finance projects on razor-thin margins. Despite mounting pressures – from community intimidation to strained cash flow – construction firms continue to adapt, innovate and search for more collaborative ways of working.
In the face of various headwinds, panellists pointed to green shoots - growth in commercial property demand, a pipeline of infrastructure and mining work, and an uptick in private-sector investment as capital that has been sitting on the sidelines begins to move.
Payment delays were identified as an existential threat to contractor viability, more damaging than a market downturn. "Cash flow is oxygen to contractors, but it's been strangled," said Dave Bates, chief executive officer of Smei Projects, noting that payment cycles have extended to 75 days or more in practice. "We are financing these projects on paper-thin margins."
Jabu Serithi, Gauteng managing director of GVK Siya-Zama echoed the concern, describing delayed payments as normalised, particularly in the public sector. "It has become untenable," she said. Despite regulations requiring government departments to pay within 30 days, the panel noted that compliance remains deeply inconsistent, with projects such as the Bus Rapid Transit stalling as a direct consequence.
Contracts and competition
Serithi also described the industry's skills shortage as very problematic, adding that the pressure of low margins makes it unsustainable for businesses to prioritise research and development and training.
Panellists agreed that clients are offloading an ever-greater share of contractual risk onto contractors, while offering little flexibility in return. The growing prevalence of Engineering, Procurement and Construction (EPC) contracts is reshaping the risk landscape, requiring contractors to build sophisticated legal and commercial capabilities that previously sat with clients or consultants.
"You need a PhD in law to get through the 2017 FIDIC contract," said Massey, adding that MDA Attorneys has observed a marked increase in EPC contract structures across the sector.
A recurring theme was the growing presence of international contractors in South African infrastructure, mining, and renewable energy projects. Rukesh Raghubir, chief executive officer of Murray & Dickson Construction, noted that major Sanral contracts and renewable energy projects are increasingly being awarded to foreign firms.
Partnership over adversity
"In South Africa, there is much talk about the demise of the Big 5 construction businesses, but I believe we should be focusing on the Agile 50, a group of solid, competent businesses with a turnover exceeding R1bn. The Agile 50 can price competitively and safely deliver projects; they are solid and entrepreneurial - this is what is required for success," he said.
The panel was united in calling for adversarial contracting models to give way to genuine partnership. Said Bates, "Early contractor involvement is a fantastic tool that has had much success all over the world, and we need a level playing field to compete with international competitors."
Neresh Pather, chief executive officer of Tractionel Holdings called on government and state-owned entities to embrace the mechanism of partnership: "They must change their mindset to become collaborators instead of authorities, which requires a shift. My biggest bugbear is the fallacy that strong balance sheets deliver projects, the truth is you need capability to deliver."
"There are people who want to invest," said Serithi. "When this is unlocked, it will be substantial."
MDA Attorneys convenes Collective Wisdom each year to explore critical industry issues. It is now in its 12th year.