How ditching a sales job led to a multi-million-rand construction enterprise
07 August 2019 | Web Article Number: ME201915689
RESIGNING from his sales job 12 years ago for a career in the construction business was a risky move for Vumile Mtyobele, but it’s one that’s paid off handsomely, as the enterprise he founded, Avumile Business Investments, went on to notch up projects valued at R86.8 million.
Avumile’s first contract was a relatively modest R300 000 job in 2007 to install air-conditioning units at the Department of Social Development in Idutywa. Last year he was awarded one of his most treasured projects, the R14 million construction of Mgwali Clinic in Stutterheim as well as the R4,1 million Thombo Primary School in Port St Johns.
In 2018, the East London-based company secured contracts worth R22 million including new building contracts in eSwatini (Swaziland), Lesotho, Zambia and Mozambique. Joining the SEDA Construction Incubator at the East London IDZ in 2016 has also unlocked value for the company and growth opportunities.
“The SEDA Construction Incubator’s focus on the improvement of the systems and processes of our business has ensured that Avumile Business Investments moves into a space of productivity and sustainability,” Mtyobele said.
“The incubator also pushed us to diversify our business which now includes a plant hire business. The plant hire business employs five people and the construction side has 11 permanent staff. In addition, in 2018 we had 40 to 50 project-based employees.
“We also benefit immensely from the incubator in that they open up access to markets which helps us secure business and as well as form their marketing support. We are excited with the inroads we have made into the African market.”
In eSwatini, his company built a clinic for the US Embassy at Emanzini and also received a sub-contract to renovate a school as well as refurbishments on houses for tetraplegics.
“We are also putting in disability friendly bathrooms for these houses on behalf of Anglo Gold Ashanti. Anglo Gold Ashanti has contracted us to build 20 houses in South Africa and Swaziland, three in Lesotho and one in Mozambique.”
Mtyobele, who had his first taste of the construction business at the age of 18 when his father allowed him to manage on his own a low-cost housing project in Dimbaza, said the company currently has a 6GB6CE grade on the Construction Industry Development Board (CIDB) which allows the company to tender for jobs up to R13 million. However, the company is in the process of upgrading to Grade 7GB which will enable Avumile to tender for jobs up to R40 million.
Eastern Cape Development Corporation (ECDC) senior manager for enterprise development Mpumi Fundam said businesses incubated at the SEDA Construction Incubator generated a combined revenue of R69,9 million in the 2018/9 financial year.
“In 2018/19 FY, ECDC provided financial support of R2,25 million and in-kind support to SCI so as strengthen its support to emerging contractors who currently participate in the programme. ECDC promotes the incubation of SMME’s and has since prioritised support to contractors.
“The return on investment for ECDC is when there are success stories such as Avumile Business Investments. Part of the ECDC’s mandate is to support entrepreneurs in different economic sectors by improving their productivity and competitiveness. Within the broader enterprise development ecosystem, incubators are one of the vehicles we use to reach out to small businesses. The incubator helps incubated businesses such as Avumile with access to markets, assistance with the structuring of tender proposals as well as with monitoring and project implementation,” said Fundam.
SEDA Construction Incubator area manager Terrence Mtola said Avumile was one of the companies that had assisted SCI to test its mentorship model.
“SCI provides technical and business development support to emerging contractors registered with the Construction Industry Development Board (CIDB). The incubator also monitors the growth of these companies and it ensures their compliance with regulatory bodies,” said Mtola.