South Africa’s construction industry, a critical contributor to the nation’s economic recovery, faces a significant challenge from criminal syndicates causing disruptions at construction sites.
These disruptions, marked by extortion, intimidation, violence, and sabotage, have stalled over 180 projects valued at a staggering R63 billion since 2019. Deputy Minister of Finance, Ashor Sarupen, highlighted the issue at the National Construction Summit, emphasizing its detrimental impact on project timelines and procurement integrity.
“Their demands for up to 30% of contract value undermine the very foundation of our procurement systems and delay the delivery of critical infrastructure projects,” stated Sarupen.
The construction sector plays a vital role in South Africa’s economy, accounting for roughly 3% of GDP and employing over 1.3 million people. Notably, the sector added a significant 176,000 jobs in Q3 2024 alone. However, these disruptions threaten its potential, particularly for low-skilled workers who rely heavily on construction opportunities.
“Every R1 million invested in construction creates over three jobs, the highest multiplier effect across all sectors in our economy,” Sarupen explained. “The government’s commitment to infrastructure development as a cornerstone of economic recovery is well-placed, with the 2024 MTBPS reaffirming a shift from consumption to investment spending.”
This aligns with President Ramaphosa’s vision of transforming South Africa into a “construction site” to drive inclusive growth and job creation. The government plans to invest over R900 billion in the sector over the next three years.
However, Sarupen acknowledged the disruptions expose deeper socio-economic fractures. “These are not merely operational challenges; they disrupt the lives and livelihoods of our people,” he said. “They stress-test our economic governance architecture, highlighting the gap between formal frameworks and reality on the ground.”
The disruptions reveal the vulnerability of business operations in an environment marked by rising unemployment and poverty. To address this crisis, Sarupen advocated for a holistic response that combines stricter law enforcement, improved governance, and community engagement to tackle the root causes.
The government’s three-pronged strategy includes reforming public procurement, expanding public-private partnerships (PPPs), and increasing infrastructure investment. The recently signed Public Procurement Act aims to establish a more transparent and inclusive system, with stricter regulations on subcontracting to prevent abuse.
“These reforms are designed to empower small and medium contractors while safeguarding the integrity of procurement processes,” Sarupen said.
The R900 billion investment plan will be supported by capital budgeting reforms to ensure project delivery on time, attracting private capital to supplement public funds, and prioritizing integrated urban development.
“This goes beyond bricks and mortar; it’s about transforming lives by providing essential infrastructure for our people,” concluded Sarupen. “The revitalization of the construction sector is a crucial component of Operation Vulindlela, a joint initiative driving economic reform.”