Criminal mafias standing in the way of South Africa’s big turnaround

The escalation of the prevalence and severity of criminal extortion groups targeting construction sites across South Africa continues to impede the country’s economic potential.

“Extortion in the construction sector has reached worryingly high levels, derailing and delaying projects worth billions of rands,” said national project manager of Business Against Crime South Africa (BACSA), Roelof Viljoen.

With the seventh administration’s plan of “turning South Africa into a construction site,” experts warn that if the country’s construction mafia crisis is not efficiently and effectively addressed, this could prove more of a pipe dream than reality.

Department of Public Works and Infrastructure (DPWI) Minister Dean Macpherson agreed with this notion, saying that their goals “can only take place if we break the back of the construction mafia.” 

The construction sector is one of the most important job-creating sectors in the country, employing over 1.2 million people.

Investment in the sector not only benefits the country through improved infrastructure, but creates hundreds of thousands of jobs on construction sites and throughout the entire construction sector value chain. 

However, the rise criminal extortion groups across the country targeting the sector threaten its stability.

“It not only sabotages the economy but also puts people’s lives and livelihoods at risk,” DPWI spokesperson Lennox Mabaso told BusinessTech.

What started off as a few “business forums” in KwaZulu-Natal invading and extorting construction sites in around 2014/15 (as outlined by a report by Jenni Irish-Qhobosheane for the Global Initiative Against Transnational Organised Crime) has now morphed into a national crisis of booming “construction mafias.”

According to the State Investigating Unit (SIU), the “construction mafia refers to extortion groups that typically seek to forcefully extract protection fees from local construction companies and contractors or extort a portion of the cost of an infrastructure project, or that specific individuals affiliated with the mafia are recruited to work on the site.”

“At the outset of a project, they invade the construction site, walk into site offices [very often] heavily armed and threaten individuals or their families,” explained construction attorney, Euan Massey.

“No progress can take place until their demands are dealt with [which] can also extend to violence and in the worst cases, has resulted in murders,” he added.

Irish-Qhobosheane explained that most mafias posing as legitimate “business forums” demand 30% of the contract value of the project as “protection” against violence and work stoppages.

This is a rate that seems to derive from misuse of a National Treasury regulation that seeks to encourage local involvement in all project procurements.

The regulation is the Preferential Procurement Policy Framework Act which required 30% of state construction contract value to be allocated to designated groups.

“While a lot of it happens under the mantra of radical economic transformation, extortionist behaviour has affected both black- and white-owned companies, which tells you it is all about the money,” CEO of the South African Forum of Civil Engineering Contractors, Webster Mfebe previously said.

Irish-Qhobosheane outlined that the activities of the construction mafia have been “fuelled by the weak response from the state, allowing them to expand their activities.”

However, the instances of “weak responses” from the state could be connected to the finding that “clear links exist between some of the business forum groups and certain political players, with business forums being accused of acting as surrogates for certain politicians,” said Irish-Qhobosheane.

This was echoed by Mfebe, who said that “political figures drive some of the business forums to retain influence and power, and these forums act as a paramilitary wing for these political figures.”

Over the past several years, the government has been seeking to up the ante in their fight against these groups, particularly given their increased collaboration with the private sector through Operation Vulindlela and the plan to “turn South Africa into a construction site.”

Mabaso said that the DPWI sees tackling the construction mafia as a crucial priority because it continues to “threaten the investment case and return on investment where the private sector partner with government in projects because they cause delays or, worse, cancellations of projects.”

“This has a direct impact on job creation and economic growth,” he added.

Some of the numerous interventions from the government include establishing specialised units within the Directorate of Priority Crimes dedicated to combating organised crime in the construction sector as well as a multistakeholder Infrastructure Built Anti-Corruption Forum (IBACF), which is convened by the Special Investigating Unit (SIU).

SIU spokesperson Kaizer Kganyago said that hundreds of arrests have been made relating to illegal practices in construction, and they are gaining ground on increasing this.

“There are ongoing investigations in the sector by various law enforcement agencies that have led to consequence management such as asset recovery, disciplinary action, and criminal prosecution,” said Kganyago.

Mabaso said that it is crucial that government adopt a zero-tolerance approach to construction mafias, “including our determination that the only meeting we will have with them will be through enforcement and the courts.”

“The biggest challenge is to have the perpetrators of this crime arrested on the spot – we need intelligence-driven operations to frustrate them before they cause disruptions which lead,” said Mabaso.

While numerous agencies are attempting to tackle this issue head-on, BACSA said that “with no signs of this trend reversing, construction firms should build extortion preparation and best practices into their planning ahead of every project.”

“The key is to identify a possible incident before it starts escalating,” explained Viljoen.

Read: A new type of mafia is hitting businesses in South Africa