South Africa's construction sector is entering a R1tn infrastructure boom and continues to generate around 130,000 jobs each quarter, yet many of the SMEs driving projects are unable to access the working capital needed to mobilise contracts.


Speaking at the 14th edition of Big 5 Construct South Africa, Lula head of product Clinton Thomas said delayed payments and limited access to construction finance are creating a critical cash-flow gap that threatens project delivery, business growth and the country's infrastructure ambitions.

“The cash-flow problem facing construction SMEs is not a symptom of poor management; it is baked into the project cycle itself. The business wins the tender, orders the materials and starts the work, but payment only arrives months later.

"This is the reality of construction financing in South Africa, where contractors often need access to working capital long before they can invoice or receive payment. Timing is everything. Instead of bottlenecks, SMEs need finance that gets them on site with the right materials at the right time.”

One of the construction sector's most persistent problems in development and delivery comes down to funding.​ For many SMEs, access to tender finance in the weeks between award and mobilisation is the difference between delivering on time and losing the contract entirely.​ Small contractors are falling behind because the funding they need arrives after the costs they must cover, impacting service delivery, timelines and liquidity.

Funding fuels growth

With the South African construction market expected to reach R160.65bn in 2026 at a 4.8% annual growth rate, and the public-sector infrastructure spend forecast anticipated to reach R1.06tn over the 2026-2029 medium-term expenditure framework, SMEs need better cash-flow support.

The data Lula brought to the Big 5 Construct South Africa stage also challenged a widespread assumption about the sector. Construction SMEs are not in distress – they are in demand, but their growth depends on funding the gap between a project being awarded and the income it eventually generates.

Lula serves SMEs across multiple sectors, with construction accounting for 15% of its total book exposure. The company has issued more than 16,000 advances to over 4,000 businesses, with an average advance value of R370,000. Within the construction sector, 37% of advances exceed R250,000, while nearly 10% exceed R1m.

At the end of Q2 2025, nearly 96,000 government invoices older than 30 days - a combined value of R12.4bn - remained unpaid, while private-sector payment cycles can stretch upwards of 150 days.

This constricted flow of cash has been disrupting project delivery for years and, with construction firms forming a significant slice of South Africa’s SME base, it is easy to see how liquidity has become a systemic bottleneck. Currently, more than two-thirds of SMEs expect to require additional financing within six months to fund working capital, and 40% are relying primarily on self-funding.

Mobilising projects faster

There are multiple cost categories sitting inside this gap: upfront materials, weekly wages and subcontractor fees, equipment, fuel and transport, supplier deposits, retention periods, and the compounding pressure of running multiple live projects simultaneously.

For many businesses, access to a ​building-material loan or other forms of short-term construction finance can determine whether a project starts on time or falls behind schedule with consequences that extend into other contracts, supplier relationships, reputation, and the ability to bid competitively for the next opportunity.

When capital is structured around the friction points experienced by the SME, then it ensures that they have the liquidity they need to put materials on site before invoicing. This ensures that companies can mobilise immediately and deliver on time despite payment delays. Modern solutions are more sensitive to the needs and pain points of a sector set to boom by providing frictionless access to the right resources.

“What construction SMEs need is working capital that moves at the speed of a project, not a bank’s credit committee. They should be supported by a different approach to underwriting that moves beyond conventional credit assessments built around static financial snapshots and instead focuses on real-time transaction data,” Thomas explained.

“Lula’s model makes funding decisions that reflect how an SME actually trades, considering the frequency, consistency and patterns of its inflows.”

Capital unlocks infrastructure

South Africa’s infrastructure ambitions will only be sustainably realised if SME contractors doing the work can fund their mobilisation from Day One. This timing constraint does not have to become a bottleneck or inhibit growth and employment when funding recognises where the SME is today.

“Growth fails when companies cannot access capital at the moment it is needed,” Thomas concluded.

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