Government blacklists 52 South African companies

The Department of Public Works and Infrastructure has blacklisted 52 construction companies in South Africa on the grounds of poor performance, fraud, and contractual failures. 

While this is a good sign that the government is enforcing regulations and requirements more tightly, it also exposes a systemic culture of non-compliance within South Africa’s construction sector. 

Building Industry Bargaining Council (BIBC) spokesperson Danie Hattingh explained that non-compliance in one area is often mirrored across other areas and multiple companies. 

Hattingh also pointed out that blacklisting is the final sanction available to the department, indicating that these companies have a history of non-compliance. 

Many of those 52 companies blacklisted have been barred from working on state projects until 2029 for various offences, including falsified BEE certificates and invoicing for work not done. 

“What we are seeing is a pattern where non-compliance in one area is almost always mirrored across others. It is rarely isolated to non-compliance with the BIBC only,” Hattingh said. 

Following an analysis by the BIBC, another 68 construction-related companies are linked to those blacklisted, with only 12 of these being registered with the council. 

“This directly supports our contention that non-compliance with one regulation strongly indicates non-compliance everywhere else,” Hattingh said. 

“Whether it is labour obligations, tax compliance, or contractual delivery, the same patterns repeat.”

The government’s poor systems and enforcement enable these repeat offenders to re-enter the market and provide substandard services. 

Hattingh explained that non-compliant contractors often deregister, rename, or re-establish entities using associates and family members as new directors to avoid detection. 

“The trend towards ‘fronting’ companies is widespread and complex. Even if a new entity has no record of non-compliance, it can still be the same operators making it difficult for clients and procurement officials to know who they’re really dealing with,” Hattingh said. 

The lack of visibility regarding the real owners of entities is particularly acute in high-volume public procurement, where scale makes investigation difficult and time-consuming. 

As a result, problematic contractors can reappear under new guises, continuing cycles of poor delivery and non-compliance.

“The role of ‘givers of work’ (government, municipalities, SOEs and private clients) is critical,” Hattingh said. 

“From tender design to contract monitoring, procurement decisions either strengthen compliance or undermine it.”

Dark clouds gather over construction in South Africa

South Africa’s construction sector is under immense financial strain amid a stagnant local economy and declining spending on infrastructure. 

The sector has experienced declining output for nine consecutive years, with many pointing to the 2010 FIFA World Cup as the point in time after which infrastructure development took a back seat in the national budget. 

Since 2008/09, growth in the government’s spending on consumption, particularly salaries, has outstripped investment in infrastructure and growth. 

This has led to the myriad of crises that South Africa faces today, from load reduction to water shortages to collapsing road infrastructure in major metros. 

These are all signs of ageing and deteriorating infrastructure that has not been maintained or upgraded over the past 15 years. 

Ten years ago, the South African Institution of Civil Engineering (SAICE) rated South Africa’s infrastructure as a C. In its latest report, South Africa has slid to a D rating. 

On its current path, South Africa is heading towards an E rating, which means its infrastructure is unfit for its purpose. 

Simply put, as the country’s population and economy continue to grow, albeit slowly, infrastructure designed and built three decades ago is not able ot handle the demands placed on it. 

Apart from government spending on infrastructure, private companies have also been hesitant to invest in property, plants, and equipment in South Africa since 2010 amid elevated uncertainty and a slowing economy. 

This has resulted in little work for construction companies, particularly in relation to major projects that were seen in the 2000s. 

As a result of the combination of lacklustre state spending and uncertainty from businesses, the construction industry has steadily shrunk.

Stanlib chief economist Kevin Lings revealed in a research note earlier this year that the sector is on track for its ninth consecutive annual decline. 

This means that the sector’s output has declined year-on-year for nearly the past decade, with little sign of a turnaround on the horizon.

Lings explained that this is quite surprising, considering the strong performance from most sectors of the South African economy throughout 2025.