SOUTH Africa’s construction companies, humbled by the competition authorities’ imposition of R1.46bn in fines last month, had the lowest margins of nine industries contributing to gross domestic product (GDP), Statistics SA said on Wednesday.
The figures show the industry’s profit margins ranged from 4% in 2007 and 5% at the height of the construction boom in 2009 to 4.8% in 2010 and 2.8% in 2011, casting new light on the Competition Commission’s finding of a price-fixing, bid-rigging and project allocation cartel in the industry from September 2006. The commission believes the cartel is responsible for an overcharge of between 10% to 30%.
The industry contributed 3.8% of GDP in 2011, up from 2.3% in 2002 and 3.2% in 2007.
Its profit margins were lower than mining and quarrying (16.5%), finance, real estate and business services (12.1%), community, social and personal services (9.2%), electricity, gas and water (8.5%), transport (6%), agriculture, forestry and fishing (5.4%), manufacturing (3.7%) and trade (2.9%).
Economic Development Minister Ebrahim Patel again took a hard line against the construction sector on Wednesday, telling the media after a meeting of the Presidential Infrastructure Co-ordinating Commission that the cartel represented large-scale corruption and fraud. He said the provinces involved should consider lodging appropriate civil claims against the companies implicated — over and above the penalties already levied.
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