President Cyril Ramaphosa has yet again made an appeal to communities not to disrupt major infrastructure projects, which is a reference to the activities of business forums or the so-called “construction Mafia”.
He was speaking during an oversight visit of the South African National Road Agency’s (Sanral’s) N2 Wild Coast toll project in Lusikisiki in the Eastern Cape.
“I call on all of our communities, particularly on the Wild Coast, to support not only this project but other projects. We have big dreams and big projects for the Eastern Cape, which is one of the poorest provinces in our country,” he said.
Ramaphosa pointed out the project, which includes the construction of the two mega bridges, will create about 8 000 direct full-time jobs, and between 21 000 and 28 000 indirect jobs.
Watch: Sanral video shows latest construction on the Msikaba Bridge as part of the N2 Wild Coast toll road project
He noted that these jobs did not exist in the area and translate into a wage bill of about R750 million, adding that government has often said it wants to transform South Africa into a construction site.
“This project is a sign of our government’s determination to proceed with our infrastructure build,” he said.
Ramaphosa said the government indicated when it announced the Economic Reconstruction and Recovery Plan (ERAP) in October 2020 that it will prioritise infrastructure spending to support economic growth and job creation in both the immediate short term as well as the long term.
He said a number of the mass infrastructure projects outlined in the ERAP have commenced.
“A number of people keep saying that we are not seeing this infrastructure, but we are seeing exactly what the infrastructure build is,” the president stressed, citing the progress on the N2 Wild Coast project.
This is a response to claims by a number of construction industry organisations and analysts that infrastructure project awards are not happening.
For instance, Construction Alliance South Africa (CASA) chairperson John Matthews this month bemoaned the lack of a consistent flow of work as a key factor affecting building contractors.
“There are gazetted Strategic Infrastructure Projects (SIPs) that we still don’t know when they will go to tender or be awarded. This makes planning impossible,” he said.
However, Ramaphosa said the government’s infrastructure plan has contributed to business and investor confidence “growing by leaps and bounds”.
This is despite surveys of civil construction and building sector confidence levels conducted by the FNB-Bureau for Economic Research (BER) this month revealing the opposite.
The FNB-BER civil confidence index improved marginally in the third quarter of 2021, but more than 80% of respondents are still dissatisfied with prevailing business conditions while confidence among major contractors declined to record low levels.
Ramaphosa said the N2 Wild Coast project is a Sanral flagship infrastructure project and one of the 18 catalytic designated national SIPs.
“By this we mean that they don’t only spur economic activity but they also have a community development component and a service delivery component,” he said.
Ramaphosa said it is anticipated that once the road is completed, it will create another 900 direct, full-time jobs and about 19 000 indirect jobs.
He said these job creation numbers affirm Sanral’s sustained commitment to sustainable job creation.
“Over the past year alone Sanral has created almost 18 000 job opportunities at its various projects around the country. This is part of a government-wide effort to create jobs in our economy,” he said.
Ramaphosa said about R4 billion will be spent on targeted enterprise development during the N2 Wild Coast project construction period, which will ensure the investment on this project will be ploughed back into the community.
He said about R120 million has already gone to local small, medium and micro enterprises (SMMEs) in this area as part of upgrading and linking of roads and several more projects are in the pipeline.
“By regulating that a minimum of 30% of expenditure is earmarked for targeted enterprise development through sub contractors and suppliers in the area, approximately R4 billion will in future flow to SMMEs from the OR Tambo and Alfred Nzo Districts,” he said.
The Msikaba and Mtentu bridges are two mega bridges that form part of the N2 Wild Coast Road project, which will connect four provinces – the Western Cape, Eastern Cape, KwaZulu-Natal and Mpumalanga.
Moneyweb reported this month that a new tender for the construction of the Mtentu Bridge is under adjudication and litigation remains a possibility to resolve a dispute between the original contractor, the Aveng-Stabag Joint Venture (ASJV), and Sanral.
Construction on this project by the ASJV ground to a halt in 2019 when JSE-listed construction and engineering group Aveng claimed the joint venture had lawfully terminated the R1.5 billion contract following a force majeure event after civil unrest, commotion, protests and threats of harm had resulted in the ASJV being denied access to the site and the ability to safely continue the execution of the project.
However, Sanral CEO Skhumbuzo Macozoma claimed the ASJV abandoned the contract.
Ramaphosa admitted the N2 Wild Coast Project has not been without its challenges, adding that construction had to be halted at the Mtentu bridge site “because of concerns by communities that they were not being properly included in the development”.
But Ramaphosa said it is pleasing that the community participation goal for targeted labour set by Sanral at Msikaba was exceeded at the end of July 2021, with it reaching 37% against 32% of work completed.
Ramaphosa said 62% of the total workforce on the Msikaba site are locals and, of the 329 employed, 156 are employed by main contractor Concor and 173 by sub-contractors.
“I want to congratulate the national Department of Transport, Sanral and the contractors for ensuring that matters around community participation were dealt with in a very sensitive manner to make sure that this project goes smoothly.
“It is my hope that Sanral continues with this proactive engagement with communities in all the projects it embarks on,” he said.
Ramaphosa said communities have a rightful expectation that they should benefit from large-scale economic projects in their areas.
But Ramaphosa at the same time called on communities to ensure “they work with us and not against us because if you work with us and not against us, you are working for the community”.
“There are moments when community members use various other means and sometimes those other means turn out into violence and protests that go violent.
“You don’t need to be violent if you want a share of the benefits from the projects. We want participation to be community led, to be community based and our people must feel that they are benefiting on their own,” said Ramaphosa.
He stressed that stoppages on projects do not just cost contractors but the entire country and also turn investors away.
It also makes the cost of borrowing higher because investors are not prepared to invest in South Africa, he said.
“It is important that we work together in this regard. The very purpose that these structures are being built is to allow our people to benefit from them. It is to allow goods and services to reach you in our communities.
“We will lose many projects and they will be forever delayed if we continue working this way.”