E3 Journal of Business Management and Economics

E3 Journal of Business Management and Economics Vol. 2 (1) pp. 012-021, January 2011; © E3 Journals; ISSN 2141-7482

MSMEs and Black Economic Empowerment in the Construction Industry: the Case of Gauteng Provincial Housing Department

Abstract

Poverty and entrenched inequality in South Africa was one of the main reasons for the enactment of BBBEE Act to promote amongst others, MSMEs. BEE-MSMEs are, however, faced with many challenges such as; lack of managerial skills, lack of finance, lack of market information, bad governance, legal and administrative hindrances ,etc . This paper sought to explore the perception of MSME contractors in the Housing Department of the Gauteng Provincial Government toward Black Economic Empowerment (BEE) interventions. Secondly, it sought to determine the level of compliance with quality assurance regulations and customer needs, and thirdly, to determine how service delivery by the Housing Department impacts on the performance of BEE MSMEs in the industry. A cross-sectional exploratory research design was adopted in which a sample of 123 contractors was purposefully selected and used as respondents. The findings revealed amongst others that, BEE MSMEs have inadequate technical and managerial skills and insufficient understanding of tender documentation. Based on the findings I recommend that MSME contractors and their employees possess relevant technical skills before inclusion for tender awards.

Keywords: BEE, MSMEs, Entrepreneurship, construction industry