These days the construction industry has either been curtailed or halted by factors that the sector is finding difficult to handle. Picture: David Ritchie/African News Agency (ANA)
These days the construction industry has either been curtailed or halted by factors that the sector is finding difficult to handle. Picture: David Ritchie/African News Agency (ANA)

Construction sector facing gangs, slow growth and now Covid-19

By Mwangi Githahu Time of article published Mar 25, 2020

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Cape Town - Experts have blamed sluggish economic growth, a decline in government infrastructure spending, construction site invasions by armed extortionist groups known as “the construction mafia”, and late payment of contractors by the state for the continuing decline in the building industry.

The blame comes after the latest Statistics SA numbers from the construction sector showed a 30.4% fall in the value of recorded building plans between January last year and January this year.

The largest negative contributions to the total decrease were made by Gauteng, KwaZulu-Natal and Western Cape.

Executive director at Master Builders South Africa Roy Mnisi said: “There has been a significant decrease in construction activity over the past few years.

“For example, in only the past three years, several large construction companies such as Group 5, Basil Read, Liviero, NMC and Essor Construction have closed operations, while many of the remaining ones have reported financial difficulties.”

Speaking about the construction Mafia, Mnisi said: “The problem started in 2016 in KZN but has now spread across the country. These are criminal gangs that invade construction sites under the guise of economic transformation with different kinds of demands.”

Industry Research firm Databuild’s chief executive Morag Evans said: “Their attacks stem from a misunderstanding of the promulgation in 2017 of new regulations to the Preferential Procurement Policy Framework Act (PPPFA), which stipulate that 30% of all contract value on state construction contracts must be allocated to certain designated groups, including black South Africans, women and people with disabilities.”

National African Federation for the Building Industry (NAFBI) president Aubrey Tshalata blamed a lack of clarity from the Treasury for the emergence of the so-called construction mafia

“This confusion, which Treasury must clarify once and for all has resulted in over R27billion in projects that are either at a standstill or delayed and incurring great costs.”

Chairperson of the Western Cape Property Development Forum (WCPDF), Deon van Zyl said: “We call on President Ramaphosa to consider the impact that the Covid-19 virus is having on the civil and building construction sectors, particularly when he addresses the Treasury and banking fraternity which provide development funding for public and private sector projects.”

“It is critical that that both private and public sector developers are given the financial latitude to be able to support contactors and subcontractors to survive these difficult times,” said Van Zyl.

Director at student accommodation group STAG African John Schooling said: “As the situation stands, I envisage a much bigger drop in the stats by the time they come out next year.

“I would say that what is needed is a really dramatic cut of the interest rates, Thursday’s 1% was not enough, we would need at least another 1.”

@MwangiGithahu

[email protected]

Cape Argus

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