South Africa’s construction industry has been held to ransom since 2015. Across the country, extortion rings have targeted the sector, demanding exorbitant fees from contractors under threats of violence and sabotage. These locally dubbed ‘construction mafias’ – and self-styled ‘business forums’ – first emerged in the Umlazi Township in KwaZulu-Natal province in 2014, as entrepreneurial and youth activism groups seeking to secure job opportunities on local building sites. By 2015, they had gained a secure foothold in the province and had spread throughout the country by 2019, moving away from legitimate campaigns to more criminal activity.

Today, as a matter of routine, these heavily armed criminal groups will occupy construction sites, sometimes under the guise of popular protest; and on threats of physical harm and destruction, will seek to extort between 30 and 50 percent of a construction project's worth. Oftentimes, these so-called business forums will follow through on their threats, with reports of mafia groups routinely carrying out assaults, murders, theft, vandalism, petrol bombings and arson on construction projects across the country. Although the frequency of violent incidents has reduced in recent years, peaking between 2016 and 2019, as companies became more accustomed and accommodating to demands, extortion targeting both public and private sector projects has become no less prevalent.

ANYONE WILL DO

Construction mafias are indiscriminate in the companies and projects they target. A multitude of critical infrastructure development projects – from roads, bridges and railways, to housing, healthcare, energy and water infrastructure – have been subject to delays and cancellations over the years due to extortionate activities by construction mafias. In January 2020, for example, the South African Forum of Civil Engineering Contractors estimated that disruptions by extortion groups had resulted in losses of up to USD 2.2 billion countrywide. In the City of Cape Town alone, the local government reported in June 2023 that it was at risk of losing up to USD 3.2 million in unspent budget due to delays on transport infrastructure projects, driven by intimidation, extortion and security threats by criminal groups.

Construction mafias also target private sector projects and companies, regardless of the size or nature of the project. Development projects across the residential property, tourism, oil and mining industries have been impacted by the resultant delays and increased costs. Small and entry-level businesses, that account for 87 percent of South Africa’s construction industry, can ill afford the additional costs, and with no other recourse, projects are often abandoned.

COMBATTING THE CRIMINALS

Commentators often point to the weak response by the state and security forces as an explanation for the proliferation of construction mafias. Nevertheless, President Cyril Ramaphosa promised to prioritise the issue during his State of The Nation Address in 2020. Since then, the government has enacted or proposed multiple policy frameworks aimed at reinforcing and protecting the industry, particularly for critical infrastructure projects relating to energy and transport. For example, in April 2022, some provisions under the new Critical Infrastructure Protection Act came into effect; this included legislation that expands protections granted to specified landmarks to include construction projects deemed to be critical to the interests of economic stability, public safety and basic services. Then, in April 2023, Public Works Minister Sihle Zikalala announced plans to fast-track the National Infrastructure Plan, under which Phase 2 proposes to address crime and corruption in the construction industry. However, as with many such initiatives and frameworks in South Africa, effective implementation has, to date, been limited.

In addition, policing is widely viewed as ineffectual in South Africa, and anecdotal reports suggest that officers at the scene of mafia attacks are often unwilling or unable to adequately investigate the matter. In some cases, police have colluded with these criminal groups.

WALKING THE LINE

Mafia groups themselves operate under a veneer of legitimacy, ostensibly provided by the 2017 Preferential Procurement Policy Framework Act that states that 30 percent of public procurement contracts should be awarded to designated, previously disadvantaged, groups. When used as intended, this legislation has undoubtedly had a positive effect on encouraging local community and business involvement in public procurement and local development. However, it has also provided criminal enterprises the perfect avenue through which they can lay claim to a large percentage of government tenders and construction contracts while little, if any, ever goes towards boosting small businesses or addressing local community needs and development.

Turning to the courts, construction companies, as well as provincial and local governments, were granted more than 51 court interdicts against extortion groups between 2016 and 2019, few of which were enforced, and all of which were patently ignored by construction mafias. Additionally, as mafia groups have become more embedded throughout the country, many companies have turned to cooperative methods, negotiating with criminal groups and working the costs into their operating budgets. However, negotiation often means recognition, further emboldening extortion groups and legitimising their demands, which not only worsens the problem in the long term, but frequently leads to additional or higher demands.

A SECTOR UNDER SIEGE

For a country already constrained by stagnant economic growth, South African construction firms can ill afford to pay the price of extortion, whether in the form of vandalism, violence and destruction, or the percentage fee itself. While South Africa waits to see whether recent government initiatives make a dent in the operations of organised crime networks, the construction sector is left with limited options: pay up or hire 24-hour private security. Delays and high costs will continue to characterise the industry, disproportionally affecting lower income areas and communities, many of which need infrastructure and housing developments most of all.