Infrastructure boom creates
growth for South African firms

The infrastructure boom in South Africa is creating the
most potential for growth for firms, according to some partners
speaking to IAB for this year’s survey of the
country.

Overall fee income has topped ZAR8.7 billion ($1.2 billion) and
overall fee income growth is standing at 14 percent, which is
slightly down on last year’s figure.

Grant Thornton South Africa grew only 6 percent but the group’s
national chair, Leonard Brehm, expects revenue growth for next year
to reach double-digits, partly because of the increase in
infrastructure spending.

He told IAB the firm has a “substantial” tourism,
hospitality and leisure business that has worked on nine of ten
projects to either build or develop football stadiums ahead of the
2010 Football World Cup, which South Africa is hosting. “There’s
been a lot of work in that regard,” he said. The mid-tier firm also
launched a new project finance sector in February this year. “Grant
Thornton is very large in the project finance business
internationally and it was with their encouragement and assistance
that South Africa opened its division,” Brehm explained.

Large-scale project

Predictions from the networks and associations
indicate the infrastructure boom could last anywhere from five
years to more than a decade, and Grant Thornton is not alone in
reaping the benefits.

Danie van Heerden, KPMG’s executive partner of marketing and
communications, said infrastructure development is one of four big
growth areas for KPMG. The firm experienced 17 percent fee income
growth during the past 12 months.

“That is where we find most of our new work coming through,” he
said, adding that the firm is involved with the Gautrain – an
underground train that is being built to link the cities of
Pretoria and Johannesburg. Van Heerden said the project is one of
the largest public private partnerships in the world.

Van Heerden pointed to forensic accounting, the outsourcing of
internal audits and the private equity industry in South Africa as
other areas of growth for the firm. With regard to private equity,
van Heerden told IAB that the industry in South Africa is
probably “a year or two behind the UK” and there will be more work
in the year to come unless it is adversely affected by global stock
market conditions.

H

Skills shortage

On the flipside, the ongoing skills shortage has once again been
identified by partners as a hindrance to growth.

Deloitte & Touche (Southern Africa) chief executive Grant
Gelink said that if Deloitte could get 10 percent more skilled
staff “we would be very happy”. However, he noted that the Big Four
firm is reaping the benefits of having invested heavily in
bursaries and talent development for a number of years.

Gelink predicted that the skills shortage could worsen in the
coming years. With 12 percent fee income growth, Deloitte is
another firm to benefit from the infrastructure boom and Gelink
said one of the challenges in the year ahead will be keeping up
with clients’ growing needs.

“I was talking to a [chief executive] of a construction company and
he said to me he cannot see a let up [in work] for the next ten
years,” Gelink remarked. “If he’s right by the way, then that
skills shortage… suddenly becomes very, very acute.”

Carolyn Canham