Local communities are no longer prepared to be excluded from job opportunities coming into their area, and business forums are the mechanisms they have developed to give them access to these opportunities.
These are legitimate structures aimed at developing the skills of local business people, rather than a mafia that grabs big chunks of projects under threat of violence.
This is the message of two businessmen, both members of business forums that Moneyweb spoke to. They responded to allegations by the South African National Roads Agency (Sanral) that its roads projects countrywide have been brought to a virtual standstill by violent actions of and threats by business forums.
These forums, dubbed the “construction mafia”, allegedly demand 30% of the value of projects for local communities. This, according to Sanral, is a misinterpretation of a treasury regulation aimed at promoting sub-contracting to small businesses.
Moneyweb has also reported that Cox Yeats Attorneys has, on behalf of construction firms in KwaZulu-Natal, won around 30 court interdicts against multiple business forums, to stop interference in construction operations on various projects.
This conduct has allegedly spread to Gauteng, Limpopo North West and the Northern Cape.
Everton-based Siphiwe Tshabalala is the managing director of Ukhozi Construction & Projects. He is chairman of the newly-established Everton West Business Forum.
The Everton West Business Forum currently has about 25 members, but is growing fast. It is also part of the greater Vaal Business Forum, a formation that represents 15 to 20 local business forums.
The Cosmo City Business Forum is organised according to municipal wards and its members are involved in various industries, including construction. Brown Soodi’s Soodi Projects CC is a member of this forum; however, he is the only person in his company with relevant experience – specialising in weigh-bridge construction.
Soodi says the forum is aimed at accessing the 30% as promoted by the Johannesburg Development Agency (JDA).
What the 30% means exactly was, however, never defined, he says. Is it labour only, meaning the whole amount will end up in the pockets of local employees in the form of wages, or is it “fit and supply”, meaning it includes material.
He says some big contractors want to “run away from the 30%” and in the end only 1% ends up with the local businesses to look after their families.
This lack of clairty leaves a lot of space for conflict…
“We want a breakdown,” Soodi says. The bill of quantities is the starting point. “If it says there is R10 for concrete, we want 30% of it. Then we all know what to expect.”
Soodi says when a client like the JDA awards a contract to a principal contractor, the principal contractor gets quotes from local sub-contractors. He then decides on the basis of price and the profile of the sub-contractor, who he wants to appoint.
The business forum facilitates this process, which starts with a community meeting where information of the upcoming project is shared with locals.
Soodi and Tshabalala agree that the sub-contractor has to know how to do the job and “the work must be perfect”. They also accept that the principal contractor carries the legal responsibility and will therefore bring its own core team, including site foremen, managers and surveyors who sign off on the work done.
But what if the principal contractors don’t play ball about the 30% local participation?
“We stop everything and and ask him to sit down. We go to him and say you cannot do this.”
Soodi warns against a mob mentality. “People make observations. They quote policy (that they believe gives them an entitlement to 30% of the project value). Some of them are intelligent, even more intelligent than you,” he says. They are where they are due to lack of opportunities, not lack of intelligence, he says.
If the principal contractor is still stubborn, the business forum sends a delegation to the client to ask for assistance.
“If the project stops due to the contractor’s stubbornness, he will incur penalties. It would not be the business forum that stops the operations, but the community,” Soodi says.
Tshabalala says it can get scary. Community members come to the houses of business forum members to demand answers. “In my street there are about 25 boys between 18 and 22 years old, who are not working.”
He cites the example of jobs at a local mall.
“If they see someone from outside cutting the grass (at the mall) they come to you. The community gets angry.”
The business forum has met with the mall management, but still jobs are given to people from outside the community. The community therefore decided to march to the mall…
“Frustration comes in stages,” says Soodi.