The South African Institution of Civil Engineering (Saice) has written an open letter to President Cyril Ramaphosa questioning the award by the South African National Roads Agency (Sanral) of tenders to joint ventures led by international firms, claiming that 1000’s of native jobs won’t materialise in consequence.
This follows the award of 4 tenders final week by the Development Bank of Southern Africa (DBSA), Sanral’s agent for the adjudication of tenders that had been cancelled in May due to irregularities.
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In the letter, Saice President Professor Marianne Vanderschuren stated the establishment is dissatisfied by the current awarding of up to R6.65 billion value of Sanral tender funds to international contractors.
Vanderschuren requested:
- Details concerning the tender adjudication course of and the standards used to award these tenders to international firms;
- Clarity on the procurement processes that can govern these infrastructure tasks, that are key to the financial growth of South Africa; and
- Insight into how these procurement governance processes shall be managed to guarantee compliance.
Focus on rising the South african financial system …
Saice referred to Ramaphosa’s State of the Nation deal with in February this yr, particularly his feedback stressing the significance of rising the South African financial system, lowering the unemployment charge and combatting poverty and inequality.
It quoted Ramaphosa as stating: “We have given ourselves 100 days to finalise a comprehensive social compact to grow our economy, create jobs and combat hunger.”
Saice stated Ramaphosa on 25 July additional acknowledged that: “The work to grow the economy and create jobs is going ahead with the support of all economic stakeholders.”
Vanderschuren stated with these feedback in thoughts, Saice is making an attempt to perceive how up to R6.65 billion value of Sanral tender funds have been awarded to international contractors.
“We perceive that South African tenders normally legislate the usage of native supplies and labour, requiring {that a} spend of 30% of the contract is designated to native jobs, and we, due to this fact, assume that these international firms will acquire the opposite 70% of the contract worth, up to the quantity of R6.65 billion as quoted above.
“Further, our members have expressed their deep concerns related to the procurement of local labour and materials in these projects,” she stated.
“Can government guarantee that this requirement will be enforced and honoured based on the experiences of foreign firms operating across Africa, which does not suggest this?”
Multiplier impact
Vanderschuren stated Ramaphosa, as a businessman, will perceive the impression of the multiplier impact and referred to tutorial literature and South African Reserve Bank information on this subject.
She stated the literature quotes that the multiplier charges for the development trade are between 0.5 and 1.3, including that the R6.65 billion that has been awarded to international joint ventures may due to this fact doubtlessly value South Africa between R9.9 billion and R15.3 billion.
“The possible negative impact on job creation and the lack of social upliftment are tremendous,” she stated.
Vanderschuren added that the Reserve Bank in 2021 indicated that between 1.7 and two formal jobs are generated for each R1 million spent within the building trade.
“In making use of these figures to the awarded Sanral tenders, between 11 300 and 13 300 jobs could not materialise primarily based on the present tenders awarded.
“Employment is also critical to the upliftment of households across South Africa,” she added.
“In light of which, with an average household size of 5.18 persons (in 2018), the lives of at least between 58 500 and 68 800 people may not improve, and could further deteriorate as a result of potential job losses.”
Answers sought
Saice additional questioned:
- If there have been no South African firms able to main and forming a part of these joint ventures;
- The impression on the financial system and the engineering fraternity because of the appointment of international corporations main these joint ventures;
- The potential unfavorable impression on employment, job creation and expertise growth for South Africans;
- If native procurement laws shall be complied with in assist of native content material and the usage of locally-sourced supplies for these tasks; and
- Who will present oversight from authorities to guarantee compliance with native procurement targets?
Ramaphosa’s spokesperson Vincent Magwenya stated Saice should deal with the matter with Sanral as a result of the president doesn’t become involved within the awarding of tenders or tender disputes.
The mission awards Saice is anxious about are:
- The R3.428 billion Mtentu Bridge contract, which was awarded to the China Communications Construction Company Ltd (CCCC) Mota-Engil Construction South Africa (MECSA) three way partnership (JV);
- The R4.302 billion EB Cloete Interchange Improvements contract, which was awarded to Base Major China State Construction Engineering Corporation (CSCEC) JV, with Base Major based by Chinese businessman Stephen J Lu;
- The R1.814 billion Ashburton Interchange mission, which was additionally awarded to the Base Major CSCEC JV; and
- The R1.057 billion R56 Matatiele rehabilitation mission, which was awarded to Down Touch Investments, with little know about this firm.
The fifth cancelled tender, which relates to the Open Road Tolling tender for the Transaction Clearing House operator for e-tolls on the Gauteng Freeway Improvement Project (GFIP), has not but been awarded.
South African Forum of Civil Engineering Contractors (Safcec) CEO Webster Mfebe stated final week that South African contractors take part and win bids throughout the globe on the premise of the relevant laws that governs procurement in these nations – and no one may query these Sanral awards offered they had been made when it comes to the constitutional rules of equity, equitability, transparency, competitiveness and value effectiveness.
Black Business Council within the Built Environment (BBCBE) CEO Gregory Mofokeng stated the council is blissful the tasks have lastly been awarded however involved that the tender awards have been dominated by worldwide firms, whereas stressing the necessity for native firms to be aggressive.
Mofokeng can be involved about the potential for these profitable Chinese bidders importing all or the majority of their materials for these tasks from China and in addition importing expertise for these tasks.
