Criminals Hinder $1.8 Billion of South Africa Building Projects

JOHANNESBURG (Capital Markets in Africa) – A South African engineering contractors’ lobby group asked the the government to better enforce security as criminals have disrupted or vandalized 25.5 billion rand ($1.8 billion) of construction projects across the country.

Armed gangs “recently” disrupted the 1.65 billion-rand Mtentu Bridge project in the Eastern Cape province, and a 2.4 billion-rand oil-storage investment project at Saldanha in the Western Cape was halted on March 13 after people demanding to be part of the project burnt down properties, the South African Forum of Civil Engineering Contractors said in a March 18 letter addressed to Finance Minister Tito Mboweni. In the first incident, police released the arrested perpetrators, and in the second, public-order officials took three hours to arrive, Safcec said.

The economy and workers’ livelihoods “are the main casualties,” the organization said. “No taxes can be collected due to no economic activity taking place. The rule of law needs to be maintained at all times in order not to scare off investors in the sector.”

South Africa’s construction and materials index is down 25 percent over the past 12 months and the attacks on projects could harm President Cyril Ramaphosa’s efforts to lure $100 billion of investment over five years to revitalize an economy that hasn’t expanded at more than 2 percent since 2013. Poor educational skills have constrained the economy, which is struggling with an unemployment rate of almost 28 percent. The country’s murder rate rose to its highest level in nine years in the 12 months through March last year as a depleted police force struggled to get to grips with violent crime.

The Finance Ministry has received the letter, spokesman Jabulani Sikhakhane said in an emailed response to questions.

Source: Bloomberg Business News