Criminal Syndicates Disrupt R63 Billion Worth of Construction Projects, Threatening Economic Recovery

Sarupen reaffirmed the government’s commitment to transforming South Africa into a “construction site” for inclusive growth.

Deputy Minister of Finance, Ashor Sarupen, has raised alarms over the pervasive disruptions caused by criminal syndicates targeting South Africa's construction sector. Speaking at the National Construction Summit, Sarupen revealed that since 2019, over 180 infrastructure projects worth R63 billion have been hindered by tactics including extortion, violence, and sabotage.

The Scale of the Crisis

The Deputy Minister highlighted that syndicates often demand up to 30% of contract values, undermining the integrity of procurement systems, delaying critical infrastructure, and impacting the livelihoods of workers.

“The construction industry is not just vital for the economy—it is a lifeline for low-skilled workers and a cornerstone for job creation. Yet, these disruptions not only hurt businesses but destabilize communities dependent on these projects,” Sarupen emphasized.

Key statistics include:

Construction contributes around 3% to GDP.

It employs over 1.3 million South Africans, with 176,000 jobs added in the third quarter of 2024 alone.

For every R1 million invested, more than three jobs are created, offering the highest economic multiplier across sectors.

A Broader Economic Challenge

Sarupen framed the disruptions as symptomatic of deeper socio-economic fractures within the country, exacerbated by unemployment, poverty, and inequality.

“These site disruptions represent more than an operational challenge; they test the resilience of our economic governance. They expose how easily formal institutional frameworks can be undermined by real-world challenges,” he stated.

Government’s Comprehensive Response

1. Reforming Public Procurement: The Public Procurement Act, enacted earlier this year, introduces measures to ensure transparency and efficiency:

Direct Payment to Subcontractors: To prevent exploitation and payment delays.

Subcontracting Rules: Allowed only when feasible and with strict oversight to avoid abuse.

These reforms aim to empower small contractors while safeguarding procurement integrity.

2. Expanding Public-Private Partnerships (PPPs):By mobilizing private sector investment, the government seeks to augment limited public resources. PPPs are positioned as a key pillar of infrastructure development.

3. Increasing Infrastructure Investment:The government plans to invest over R900 billion in the construction sector over the next three years. These funds will focus on:

Urban Development: Creating integrated and dynamic cities that boost economic activity.

Social Infrastructure: Building housing, schools, healthcare facilities, and transport networks.

Operation Vulindlela and Future PlansSarupen also outlined progress under Operation Vulindlela, a reform initiative launched in 2020, which has delivered:

Stabilized electricity supply.

Lowered digital communication costs.

Secured sustainable water supplies.

Enhanced freight transport efficiency.

Reformed visa regimes to attract skills and grow tourism.

Phase 2 will prioritize urbanization and economic growth through:

Expanding housing and transport infrastructure.

Supporting the rapidly growing urban population.

The Role of the Construction Sector in Economic Recovery

Sarupen reaffirmed the government’s commitment to transforming South Africa into a “construction site” for inclusive growth.

“This is not just about bricks and mortar. It’s about transforming lives, creating opportunities, and building the infrastructure needed for housing, education, healthcare, and transport,” he said.

As the government tackles this crisis, Sarupen stressed the importance of holistic solutions combining stricter law enforcement, community engagement, and long-term economic reforms.

“We cannot allow criminal syndicates to jeopardize our recovery. The construction sector is pivotal to our broader reform agenda and the future of South Africa’s economy,” he concluded.This renewed focus on the construction sector aims to rebuild trust, foster investment, and create jobs while addressing the socio-economic challenges underlying these disruptions.