Since 2019, construction site disruptions by criminal syndicates have disrupted over 180 projects worth R63 billion, using tactics such as extortion, intimidation, violence and sabotage.
"Their demands for up to 30% of contract value undermine the integrity of our procurement systems and delay critical infrastructure delivery," the Deputy Minister of Finance, Ashor Sarupen, said on Tuesday in Durban.
Addressing the National Construction Summit on site disruption, the Deputy Minister said while the construction industry faces numerous challenges, none is more urgent than the persistent site disruptions by criminal syndicates and community protests.
South Africa's construction industry is a vital cog in the economy as it contributes around 3% to gross domestic product (GDP), employs over 1.3 million South Africans, with 176 000 jobs added just in the third quarter of 2024.
This sector is a lifeline for low-skilled workers, who often struggle to find opportunities elsewhere, however the disruptions undermine the sector's potential.
"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.
"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," the Deputy Minister said.
Over the next three years, government plans to invest over R900 billion in the construction sector.
"Our reforms in procurement, infrastructure investment, and structural economic transformation are concrete commitments to changing the lived realities of millions of South Africans.
"However, to fulfill these ambitions, we must recognize that the construction mafia and site disruptions reveal deeper socio-economic fractures within our country.
"These disruptions are not merely an operational challenge. It is not only businesses that are being disrupted but the lives and livelihoods of our people," the Deputy Minister said.
They also represent a critical stress test for the broader economic governance architecture, revealing the fragile interdependencies between formal institutional frameworks and reality on the ground.
"For now, these disruptions show how easily our carefully planned economic rules break down when they meet real-world challenges.
"They show just how difficult it is to conduct honest business in an environment of deepening unemployment, poverty, and the desperation it often leads to.
"To address this crisis, we need a holistic response--one that combines stricter law enforcement, improved governance, and community engagement to address the root causes of these disruptions," Sarupen said.
Government's intervention
To address these challenges, the government is pursuing 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.
"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.
He said these reforms are designed to empower small and emerging contractors while safeguarding the integrity of our procurement processes.
Government's R900 billion in planned investments is supported by capital budgeting reforms to ensure that projects are well-planned and implemented on time, mobilising private sector funding to augment limited public resources and prioritising integrated urban development to create dynamic cities that enable economic activity.
"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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"Our efforts to revitalize the construction sector are part of the broader reform agenda under Operation Vulindlela, a joint initiative between the National Treasury and the Presidency," Sarupen said.
Since its launch in 2020, Operation Vulindlela has delivered significant progress in:
1. Stabilising the electricity supply.
2. Reducing the cost and improving the quality of digital communications.
3. Securing sustainable water supply.
4. Enhancing the efficiency of freight transport.
5. Reforming the visa regime to attract skills and grow tourism.
"Phase 2 of Operation Vulindlela focuses on creating dynamic and integrated cities to support urbanization and economic growth. This will require substantial contributions from the construction sector to build the housing, schools, and transport infrastructure needed for our rapidly growing urban population," the Deputy Minister said.
