Gregory Mofokeng, deputy chair of Construction Alliance South Africa (Casa) and vice president of the Black Business Council, said the construction industry is concerned about international competition, which is already in South Africa.
“The Chinese are here. You saw that with the Sanral [South African National Roads Agency] tenders late last year. There was a big brouhaha,” said Mofokeng, who was speaking during a construction conference hosted by MDA Construction Attorneys last week.
“We see them everywhere whether you are tendering at Eskom or you are tendering at Sanral.
“We have to find an appropriate policy response to the Chinese and I am glad to say we are working on a plan to make sure that we do ring fence work for South African companies and we cushion ourselves against this international competition that is here already,” he said.
His reference to Sanral tenders relates to Chinese firms in November 2022 being awarded the lion’s share of four contracts valued at R17.4 billion that had been cancelled earlier that year by Sanral.
Investor confidence ‘could hit us like a tsunami’
Elsie Snyman, founder and CEO of construction market intelligence firm Industry Insight, also touched on the threat to the domestic construction industry from foreign competition.
Snyman said Industry Insight has always maintained that once the framework for privatisation to take place on a widespread level is established, investor confidence will come back and “could hit us like a tsunami”.
She referred to the success of renewable energy projects and said privatisation is starting to happen in transport and is also going into electricity grid capacity.
Snyman said South Africa is an opportune country for investment but questions how much of that investment “we are sacrificing to foreign ownership”.
“We don’t know. That is our biggest threat probably that comes with privatisation. Foreign participation in terms of investors, ownership, and of course, in terms of contractors,” she said.
Mofokeng said Casa members agree with the narrative that there is a tsunami of work coming the industry’s way and are cautiously excited about it.
He said there are a lot of big projects in the pipeline coming from big state-owned enterprises (SOEs) such as Rand Water, the Trans-Caledon Tunnel Authority, Eskom and Sanral but the industry is concerned about capacity issues for projects outside the SOEs.
Local government infrastructure spending concerns
Snyman said one of the biggest concerns she has about the 2024 Budget that was tabled recently is that a bigger portion of government infrastructure spending is being allocated to local government, with the allocation of infrastructure expenditure to local authorities projected to increase from 40% in 2010 to 50% by 2026/27.
She said the management, performance and project implementation problems at local government are known: a case study on 137 projects by the Auditor-General showed that 70% were delayed and more than 50% had cost overruns.
“Are local governments equipped to deal with more money moving through local government when they can’t even spend the budgets they have?
“Treasury just takes it [the money] back. Who wins in that scenario? Treasury, because they just simply take the money back.
“We are not sure where that money is then allocated to but service delivery doesn’t happen and municipalities are left with the same problem.
“You have to put capacity into local government, you have to support local government. You cannot simply throw more money at institutions that are not operating efficiently,” she said.
Mofokeng is hoping councils such as the SA Council for the Project and Construction Management Professions (SACPCMP) and the Engineering Council of South Africa (Ecsa) finally do something about the capacity of municipalities and indicated the construction industry needs to push professionalism, especially in municipalities.
He said good work is already being done to put municipal managers on notice that if they do not get the minimum required qualification “you are out of there”, and the same thing is happening with chief financial officers.
Mofokeng expressed concern about the fragility of the construction industry because of the capacity it has lost over the past decade and its ability to execute all the pending projects.
“We expect the industry to work in unison to make sure that we can rebuild that capacity in the shortest time possible so we are able to implement the projects that are coming,” he said.
‘Administrators are running infrastructure projects’
Association of South African Quantity Surveyors president Newton Baloyi said it is a liability that administrators are running infrastructure projects while infrastructure professionals are excluded.
“It’s an endemic problem in this country. We need professional activism. That is the only way we can fix it,” he said.
Baloyi said the fact that the bulk of the infrastructure expenditure allocations are going to local government “is a crisis”.
“We definitely need to be proactive. Watch the pipelines and put structures in place that put pressure on the system to stay accountable.
“We can only regulate those that are registered.
“Government is appointing people who are not registered so we need to partner with the police to prosecute those who do work which is identified for professionals but who are doing it outside of that,” said Baloyi.
Dr Allison Anthony, a public procurement law researcher, said infrastructure is the bedrock of any country’s economy because it greatly affects efficiency and service delivery but one of the big challenges is the absolute plethora of legal rules.
Anthony said the legislature and National Treasury are very seriously involved in creating a new Public Procurement Bill and the definition of procurement in the 2023 version of the bill includes construction, which automatically means the entire act will apply to construction procurement as well.
Read: Public Procurement Bill will ‘hinder’ infrastructure delivery
She stressed that one of the construction procurement issues from a legal perspective that needs to be urgently addressed is that “there are too many cooks that are spoiling the broth”.
“By that, I mean National Treasury has got a very heavy involvement, which in my view is not really justified because legally the CIDB [Construction Industry Development Board] is the custodian of construction procurement … [through] the level of instruction notes, practice notes etceteras that are published by National Treasury are problematic,” she said.
Business forums
Mofokeng criticised the way in which communities are involved in projects and the need for realism about the issue of local business forums that “undermine development and capacity building”.
He said if a contractor trains people in Soweto, they cannot take these trained people to another project in Tembisa, which means that training is lost to the industry.
“Until we can nip that in the bud and find a solution, we will just keep on throwing away money … because I can’t invest R1 million in Soweto and then can’t take that resource to Tembisa. I must invest anew when I get to Tembisa,” he said.
Mofokeng said a lot of money is pushed into training but stopped “counting” the CIDB register of contractors when the number passed 130 000 contractors.
“There are just too many players. It doesn’t matter what you do, you are not going to touch everybody,” he said.
The source of this hardhatNEWS is Moneyweb
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