Why South Africa’s construction industry is on shaky ground

A South Africa construction group is calling on the government to intervene following a series of recent episodes in which $1.8 billion worth of building projects have been disrupted by armed groups around the country.

A letter from the South African Forum of Civil Engineering Contractors, a lobbying group, to the country’s finance minister, Tito Mboweni, details the incidents and their impact on investor confidence and the country’s construction industry, which has seen a flight of technical personnel because of the incidents, Bloomberg reported.

In the first incident, a joint venture pulled out of the Mtentu Bridge project in the Eastern Cape because of “site disruptions by armed gangs demanding to be part of the project.” Then, earlier this month, “armed gangs” demanded work before ultimately burning down the properties at a German oil storage project in the town of Saldanha in the Western Cape. It took public order police three hours to arrive to the scene, the letter said.

In a subsequent press release, the builders’ group said it had contacted President Cyril Ramaphosa and characterized the incidents as a “crisis” for South Africa’s construction industry. It comes as Ramaphosa has been trying to attract $100 billion of investment over five years to boost his country’s economy. Meanwhile, South Africa’s construction and materials index has fallen 25 percent year over year, according to Bloomberg.

The country’s construction industry has been hit hard by high national debt, little infrastructure spending and a depressed economy, as the outlet previously reported. [Bloomberg] — Mary Diduch