Deputy Minister of Finance, Ashor Sarupen said that since 2019, criminal syndicates have disrupted over 180 construction projects worth R63 billion.
He noted this shocking figure while addressing delegates at the National Construction Summit in Durban on Tuesday.
“Their demands for up to 30% of contract value undermine the integrity of our procurement systems and delay critical infrastructure delivery,” Sarupen explained.
He said that the South African construction industry faces numerous challenges, none more urgent than the persistent site disruptions caused by criminal syndicates and community protests.
The deputy minister said South Africa’s construction industry contributes around 3% to gross domestic product (GDP) and is a vital “cog” in the SA economy.
The construction industry employs over 1.3 million South Africans, with 176,000 jobs added just in the third quarter of 2024.
Sarupen emphasises that this sector serves as a vital lifeline for low-skilled workers, who often face significant challenges in securing opportunities elsewhere. Unfortunately, disruptions in this sector only exacerbate the difficulties these workers encounter, further entrenching their struggles.
R900 billion investment
“Construction projects also have an unmatched multiplier effect. For every R1 million invested in construction, more than three jobs are created. This is the highest multiplier across all sectors in our economy,” he added.
“It is no surprise that the government has identified infrastructure development as a cornerstone of our economic recovery. The 2024 Medium-Term Budget Policy Statement (MTBPS) reaffirmed our commitment to shifting government spending from consumption to investment.”
“This aligns with the President’s call to transform South Africa into a ‘construction site’ to drive inclusive growth and job creation,” Sarupen said.
Government is planning to spend over R900 billion in the construction sector over the next three years.
“Our reforms in procurement, infrastructure investment, and structural economic transformation are concrete commitments to changing the lived realities of millions of South Africans,” the deputy minister said.
Government’s plan
In order to achieve these construction goals, government needs a holistic response to the construction mafia and their disruptions, he said.
The response by government will combine stricter law enforcement, improved governance, and community engagement to address the root causes of these disruptions, Sarupen explained.
Government has a three-pronged strategy, which includes reforming public procurement; expanding public-private partnerships (PPPs) and Increasing Infrastructure Investment.
“The Public Procurement Act, signed into law earlier this year, lays the foundation for a more transparent, efficient, and inclusive procurement system. Under the new regulations, subcontracting will be allowed only where feasible and must follow due process to prevent abuse,” he noted.
“Government entities will have the option to pay subcontractors directly, eliminating the delays and exploitation often experienced under the current system,” the deputy minister said.
“This is not just about bricks and mortar; it is about transforming lives by providing the infrastructure needed for housing, education, healthcare and transport.”
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