Abuse of 30% construction rule ‘cannot continue’, says Macpherson

Defeating the construction mafia is key to developing the nation’s infrastructure, declared the Department of Public Works (DPWI).

Minister Dean Macpherson gave the keynote address at a national construction summit on Tuesday, outlining a new partnership with national departments to put development first.

Held at the Durban Convention Centre, the summit concluded with the signing of a declaration between Macpherson’s department, police and national treasury.

30% local procurement rule

In his address, the minister said that a stance against lawlessness would be solidified by “drawing a line in the sand”.

He targeted a provision in government construction projects that stipulates that 30% of the work must be given to businesses and communities based near the project.

This guaranteed piece of the construction pie is being abused by contractors who either demand their slice upfront, or use muscle to force a seat at the table.

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Macpherson said the 30% rule, which should only apply to government contracts over R30 million, was also being used to strongarm the private sector, chasing away investors.

“This simply cannot continue. We need to have an honest conversation today about whether the 30% local procurement rule achieves its intended outcomes,” said Macperson.

“We are unashamedly committed to the empowerment of all South Africans, but we cannot allow criminals to profit under the guise of empowerment,” he added.

New declaration of intent

The DPWI announced a list of interventions that will be pursued in 2025, with the assistance of police and the national treasury.

More appropriate legislation governing the construction industry will be formulated, as will more advanced date and reporting systems.

Authorities will streamline development of entrepreneurs and programmes to upskill workers, as well equally integrating local communities.   

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For industry stakeholders, collaborative platforms will be formed to share ideas and problem-solving practices.

To free construction sites of crime, addressing extortion complaints with more urgency will be prioritised.

“We will no longer be negotiating with criminals just to be able to build the essential roads, dams, schools and hospitals that our people need,” stated Macpherson.

R63 billion in projects disrupted since 2019

Syndicates demanding access to construction contracts disrupted over 180 projects worth R63 billion since 2019, revealed Deputy Minister of Finance Ashor Sarupen.

HE added that government planned to invest a further R900 billion in the construction sector over the next three years.

“Construction projects also have an unmatched multiplier effect. For every R1 million invested in construction, more than three jobs are created,” stated Saupen.

The signing of the declaration in Durban was thus vital in ensuring that the industry was no longer abused and fulfilled its potential to uplift South Africans.

“[The declaration] binds sectors to implement certain interventions to discourage criminality at construction sites, reduce opportunities for disruptions to occur, and hold the guilty accountable,” concluded Macpherson.

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