Durban – Political analysts and trade unions have warned eThekwini Municipality that its decision to enforce a policy requiring building contractors to share almost a third of their government work with local communities could result in legal action against the city, corruption and the exploitation of workers.
Independent economic analyst Professor Bonke Dumisa said the municipality should not take politically convenient decisions without considering proper implementation – decisions that could lead to the municipality being taken to court regularly.
Dumisa was speaking following the announcement by Mayor Zandile Gumede that building contractors getting work of between R5 million and R30 million should subcontract 30% of that to local communities or face disqualification.
“Because she (Gumede) has made the announcement, I am sure she has consulted on it. These are good regulations that are meant to spread the economic activity, because the big companies have not been interested in transformation,” said Dumisa.
He said he recently attended a briefing by the National Treasury where the issue was discussed in detail.
“These are very noble objectives, but my concerns lies with implementation. There must be clear and full disclosure about the conditions before someone is appointed."
“We must remember that these are regulations, it’s not the law. They are meant to close the gap in the Preferential Procurement Act in the meantime, because the law takes a long time to pass.”
Dumisa said should the disclosure and the implementation not be proper, those being given work could agree to conditions but, on having secured the work, change their minds or want to to pick who they would subcontract to, which would open the door for fraud.
He said poor implementation could lead to the municipality losing cases in court.
Organisations representing builders have welcomed the mayor’s announcement, while unions warned against its potential for abuse.
Gumede recently announced that no major contract would go to one service provider. She said housing contracts often went to just a few companies without benefiting the local communities and small businesses that hired local workers.
The proposal comes as the city is under siege from groupings such as Delangokubona Business Forum that are using strong-arm tactics to extract business from the municipality.
Kile Kwinana, the president of South African Women In Construction (Sawic), said they welcomed the policy.
The organisation represents about 1500 women across the country and about 60 businesswoman in KwaZulu-Natal.
“This has been long overdue, this was supposed to have been implemented a long time ago,” she said.
She said Minister of Human Settlements Lindiwe Sisulu had made the proposal in her 2014/15 Budget speech.
Kwinana said it was unlikely the policy could be abused unless the main contractor was allowed to choose who they wanted to work with.
“We support such determination because for woman to compete in the free market is difficult.”
She said although women were making headway, they still faced difficulty getting financing, “and most of their businesses end up being hand to mouth”.
A Durban contractor, Patrick Radebe of the Ntheng PT constructruction and Trading CC, who is primarily involved in home construction, said the initiative could help small contractors like himself progress.
“I have never received any work from the municipality. I have to acquire documents, which prevents me from being able to get any work from the municipality."
“The documents cost a few thousand rand, I cannot spare that as I have children and the money I make goes towards looking after my family.”
The biggest project he had undertaken was for R40 000.
Cosatu Provincial Secretary Edwin Mkhize said they viewed the proposal as a way to transform the economy.
“What we must guard against is the abuse of these progressive policies to benefit a few friends and cronies,” he said.
Mkhize said the exploitation of workers was one of the things they looked out for.
“There are big contractors who get work from the city that are mistreating workers. Declining of the working standards of workers is something that we will not tolerate.”
Goodenough Hlongwa, the provincial organiser of the Building Construction and Allied Workers Union, said the proposal would not have any impact on the lives of the people it was supposed to benefit, but was a threat to workers’ rights.
“We are against that proposal because the people who are subcontracted often end up just abusing the workers,” he said.
Radebe said it was important for the unions to be consulted.
President of the Durban Chamber of Commerce and Industry, Zeph Ndlovu, said on Tuesday that they welcomed the announcement.
“At the end of the day we have to share the spoils,” he said.
“We would like to see the bigger companies coming and empowering individuals, but companies that have clout, and we would like to see quality and building standards upheld.”
Independent political analyst Protas Madlala said the recommendation needed to be carefully crafted, implemented and monitored.
“Subcontracting is viewed by some people as a form of exploitation and slavery. All the nitty-gritty things need to be in place,” he said.
Madlala said there had been a great deal of exploitation in the past where black faces were paraded in public, but had no say in companies’ boardrooms.
Madlala said the mayor had good intentions, “but there is also pressure coming from groupings like Ama- Delangokubona, who are demanding tenders.”