South Africa’s R68 billion mafia nightmare

 ·27 Jun 2023

Mafias are hijacking construction sites across South Africa, costing the economy billions.

Speaking at the Big Five Africa Construction Summit in Midrand on Tuesday (27 June), public works minister Sihle Zikwalala said that construction mafias had been a nightmare for construction companies that want to finish projects.

He said the government is in the process of drafting policies and legislation to tackle the syndicates while hundreds of cases are being investigated.

Zikalala said that according to pre-pandemic data, backlogs and hindrances on construction sites as a result of mafias cost the economy more than R68 billion across 186 projects.

Issues surrounding construction mafias have been highlighted on multiple occasions by the minister.

In April earlier this year, speaking to the media on progress made on large-scale infrastructure projects, Zikalala said that his department had to meet with the Economic Sabotage Unit to work in conjunction with the police to deal with economic crimes and the rising phenomenon of the construction mafia.

Alan Fuchs, the spokesperson for the Democratic Alliance in Gauteng, said that mafias use intimidation to extort a percentage of a company’s contract.

Speaking to ENCA, he said that criminal organisations have undoubtedly played a significant role in damaging the construction industry.

Fuchs said that through a misinterpretation of the law, the mafias believe that they are entitled to 30% of the contract that was obtained through a tendering process.

The Preferential Procurement Regulations state that any project valued over R50 million should allocate 30% of its funds to “local input.” The spokesperson said this requirement has been misunderstood by construction companies, who believe it obliges hiring individuals from the project’s immediate community.

Kganki Matabane, the CEO of the Black Business Council, said there is a lack of political will to deal with the issue, which has now spiralled out of control.

The CEO said that it is also having a damaging effect on foreign investors and their interests in South Africa. He said that investors are asking themselves if the level of lawlessness is something that can be dealt with and whether it would affect their investment.

He added that the government had left it very late and is too soft on criminals. Matabane called for firm action to be taken decisively.

A recent case of public projects being stalled by mafias was seen in the City of Cape Town on 13 June when across the city, projects worth R58.7 million were halted due to threats, murder and ‘mafia-style” extortionists.

Rob Quintas, the city’s mayoral committee member for urban mobility, said that Cape Town and its contractors are being held ransom, ultimately having negative effects on service delivery.

“We naturally have targets for our capital expenditure, and it is disappointing to be forcibly prevented from meeting those targets, but we do not negotiate with extortionists, and there is simply no rand value for human life,” Quintas said.

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