Contractors in the building industry have welcomed the newly-appointed Minister of Public Works and Infrastructure, Patricia De Lille’s launch of an investigation into the failure by the department to pay them within the stipulated maximum period of 30 days.
Welcoming the announcement, the President of Master Builders South Africa, John Matthews said the Federation was pleased to see the Minister actively involved in finding solutions to the struggling sector.
“We presented challenges bedevilling the sector to the President and we are pleased that action is being taken to address them. This is a positive step in the direction to rescue the construction industry in South Africa”, said Matthews.
“The goal however, is to address the systematic and human inefficiencies that are causing bottlenecks in the timely payment of contractors.”
Minister De Lille announced a full-scale investigation into the failure of the department to pay its service providers within 30 days.
As of 22 July, the department had 2085 unpaid invoices that were beyond the 30-day due date from major construction projects that include contractors and consultants.
Matthews said this was unsustainable.
“Construction companies are closing down in hordes by the day because they have not been paid. We have consistently raised this matter with the government and reported on the negative impact it has on the ability of our members to remain in business.”
The construction industry lost 142 000 jobs in the first quarter of 2019.
Master Builders reported that four major companies halted operations and went into business rescue and voluntary liquidation in 2018 alone.
Many other small and medium sized construction companies were equally affected and also filed for liquidation due to the difficult operating environment.
Recently, one of the major construction companies, Group Five filed for bankruptcy protection after its creditors pulled funding.
The challenge of late payments by the government has been a major concern in the construction industry, and led to the calling of an industry Congress in September 2019 to present the sector’s proposals on this and other matters to President Ramaphosa.