eThekwini cancels construction incubator deal, endangering emerging contractors' future

The National Construction Incubator Trust's (NCI) alleged breach of contract with the eThekwini Municipality will be to the detriment of Small, Medium, and Micro Enterprise (SMME) contractors in the programme.

The municipality’s Economic Development and Planning Committee stated in its report to council in October 2025 that despite the chances provided to the NCI, they were unable to fulfil their obligation. An agreement was established with the Inanda, Ntuzuma, and KwaMashu (lNK) NCI to support 30 emerging contractors in the INK area. The municipality is in the process of terminating the partnership contract with the NCI and saving R4 million in the process.

According to the municipality, the INK group included 40% of youth-owned, 30% of women-owned, and 30% of businesses owned by people living with disabilities, as categorised by the Construction Industry Development Board (CIDB) grading.

"Contractors were selected based on their demonstrated potential to overcome challenges typically faced by emerging contractors in the industry. To support their growth, the SMME Division was to provide training, mentorship, and other valuable interventions," the committee stated in its report. 

During the financial year 2023/2024, only a small portion of the implementation plan was executed. According to the municipality, the invoice from NCI could not be processed because they did not provide audited financial statements as required by the Municipal Finance Management Act (MFMA) and the Memorandum of Agreement (MOA).

"No payment had been processed to NCI for this contract due to failure to comply with the requirements of the MFMA," added the committee. 

The municipality stated that upon the termination of contract, the SMME Division will utilise savings in the 2025/2026 financial year to enhance the capacity building of construction SMMEs through structured transfers of business acumen and technical knowledge, leading to sustainable business practices, job creation, and positive contributions to the city's economy.

"The goal is to support enterprise development for both current contractors and emerging contractors in the INK area," the committee stated. 

The three-year incubation program intended to achieve the following objectives. 

a) Retain 17 contractors currently in the program for an additional 18 months, focusing on devising strategies for business recovery and support in response to challenges and opportunities arising from Covid-19, floods, and general business development support needed for emerging contractors.

b) Recruit and incubate 40 new contractors over three years, consisting of: 10 aspiring contractors from INK; 15 CIDB grade 1-2 contractors; 10 CIDB grade 3-5 contractors; five contractors requiring post-incubation support from the previous program.

c) Implement an outreach program that trains an additional 15 contractors each financial year through a Construction Education and Training Authority-funded skills development program, covering areas such as bricklaying, plumbing and painting.

d) Enhance access to markets by increasing procurement opportunities in both the private and public sectors.

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