Industry physique Cement & Concrete South Africa (CCSA) says the complete native sector is in disaster, because of a “toxic cocktail of factors” together with the development mafia menace.
“The fact is that it [the construction mafia] is having an effect on the construction industry. Tenders are purposefully being delayed; projects are also being delayed or halted as a result,” CCSA CEO Bryan Perrie tells Moneyweb.
“When tenders or projects are delayed or halted, the service providers – in our case, the cement and concrete sector – suffers significantly. Many plants are located in deep rural areas and that means because the work has been delayed, workers and their families are affected.”
Chartered accountant and analyst Khaya Sithole explains that the development mafia, who current themselves as members of the communities they function in, requires 30% of the financial worth of contracts from small, medium and micro enterprises (SMMEs). He says the entities have been legitimised by communities and [unofficially??] via the 30% state procurement preferential procurement regulation launched in 2015.
“This mafia has been existing before 2017. It has been traced back to Inanda and KwaMashu, as seen with the Bridge City shopping centre and road upgrade issues,” Sithole provides.
“How it works is that whoever wins the tender must pay 30% of the contract’s value in order to be protected by said mafia groups. If a business wants to operate without interruption, that 30% must be paid.”
Meanwhile, South African National Roads Agency (Sanral) on Wednesday mentioned that the opinion of overseas firms coming into the nation to do development work as a result of “it is almost impossible” for South African contractors to work within the nation due the development mafia, will not be useful.
This follows Sanral awarding the majority of 4 contracts valued at R17.4 billion, that it had cancelled earlier this yr, to overseas firms – particularly Chinese corporations.
Sanral additional famous that within the final monetary yr, it supplied over 1 000 SMMEs with work on development, rehabilitation, and upkeep initiatives. It says the overall quantity earned via these contracts was over R2.3 billion.
Meanwhile, the CCSA warns that the cement and concrete industry is being threatened by different challenges, together with these of financial decline, low cost imports and environmental points.
“In addition to the general economic downturn and decline in investor confidence, the sector was hit hard by the Covid-19 pandemic lockdown.”
Read: PPC laments lack of cement gross sales progress from SA infrastructure programme
The affiliation provides that the native cement manufacturing, which is normally round 20 million tons, has dropped to 12 million tons. Adding to the stress is the truth that multiple million tons of cement imports, the equal of a complete cement plant, enters South Africa’s markets yearly.
Overall this disaster threatens 35 000 native jobs within the sector, together with billions of rands in investments within the sector’s worth chains, based on the CCSA.
Perrie says that with a lot at stake, the sector is in discussions with the South African International Trade Administration Commission (Itac) and the Department of Trade Industry and Competition to take “positive action” to prioritise the native cement industry.
Read: Imported cement continues to circulation into the nation
He says that whereas the industry stays hopeful of a lift from the Sustainable Infrastructure Development Symposium (Sids), it has not but materialised.
“More is required to secure the sustainability of a sector impacted by both the global pandemic and a decade-long slowdown in South Africa’s planned infrastructure build out,” he provides.
Net zero problem
The CCSA says a worldwide problem confronted by the sector is its important carbon footprint. It notes that the local weather change problem to the industry’s sustainability lies in its manufacturing course of which emits important portions of greenhouse gases.
This, it admits, impacts South Africa’s decarbonisation commitments in direction of internet zero emissions, throughout the Just Energy Transition funding plan.
Perrie says the native cement sector has dedicated itself to “Vision: Net Zero Carbon by 2050”.
“This includes an undertaking to decarbonise in accordance with the 1.5˚C global temperature increase pathway in the Paris Agreement and re-enforced at COP26 held in Glasgow last year,” he provides.
“The local cement and concrete sector has set key milestones for 2030 in accordance with South Africa’s Technical Reporting Guidelines and in line with the Intergovernmental Panel on Climate Change reporting framework.”
Nondumiso Lehutso is a Moneyweb intern.
