Disruptions on construction sites have been growing since 2016, or even as early as 2008, depending on who you ask. What are the current issues and how is the country going to get this scourge under control? In a webinar hosted in July by Creamer Media in partnership with Construction Alliance South Africa (CASA) and sponsored by MDA Attorneys, a panel of experts shed some light on this issue.
Euan Massey, director of MDA Attorneys, explained that criminal elements were taking advantage of uncertainty regarding the 2017 Preferential Procurement Regulations, which outline a goal for setting aside 30% of a project for local participation. “There is a misunderstanding regarding the word ‘local’. Is local South African? Is it provincial? Is it municipal or is it related to the area adjacent to sites where the work has been performed? This has allowed mafia-like organisations to extort money from contractors and disrupt projects.”
When these regulations were first enacted, employers passed down these procurement responsibilities to contractors, who were left to their own devices to implement the 30% requirement. Only recently has it been acknowledged that commitment is required from all role- players, including State-owned entities, to achieve the requirement.
“We can’t have projects where we have a blanket 30% requirement, where the work that’s being executed just doesn’t accommodate that requirement. We need to identify the target enterprises to which the 30% will be awarded, how the work will be awarded and how the target will be achieved. This will ensure that money is awarded to people and entities who create new businesses and grow the economy,” Massey added.
A total of 682 extortion-related cases have been investigated.
An amount of R65 billion was lost to the economy due to blockages and disruptions before Covid-19. The post-pandemic effects are still unclear.
The public procurement regulations gazetted in 2017 specify the requirement for 30% local participation on public sector projects in excess of R30 million, which has raised some issues:
There is uncertainty about the word “local”. Does it mean the immediate area, the province or the country?
Unrest around construction projects is purportedly related to the exclusion of small businesses or labour in the area.
Some elements have taken advantage of the confusion and demand 30% of the profits.
Disruptions are being perpetuated by violent organised crime syndicates.
The ability of the South African Police Service (SAPS) to process homicide cases has declined by 55% (2012-2020).
Contractors and sub-contractors are expected to deal with the consequences arising from a lack of public engagement and site disruptions.
KwaZulu-Natal currently has the highest incidences of construction disruptions, but the problem is quickly spreading across the country on both public and private sector development sites.
The road forward
The following needs were identified as key:
Law enforcement should be improved, so that perpetrators face a very real threat of jail, loss of assets and the dismantling of their networks.
The enforcement of court interdicts, as the safety of personnel both on and off site needs to be ensured.
Amendments to contracts as standard practice, to include time to promote local participation, and with information on how to deal with site disruptions transparently, so all rights are protected.
Clarification of the 30% local business element in the new Public Procurement Bill (PPB), removing ambiguity and addressing the concerns from all parties within the construction industry.
Interventions from the government include:
The provision of a social facilitation framework to mitigate against community unrest.
New police focus with organised crime detection services, which is already having some success although no kingpins have been arrested yet.
The PPB is currently in consultation and should be available for comment soon.
During the webinar, Massey said that interdicts are a reactive measure, with limited success. “While they can be successful against individuals, construction-mafia organisations replace such individuals, which makes it difficult to curb disruptions. We must take lessons from the mining industry, which addressed the issue head-on by involving local communities and identifying areas of participation.”