Infrastructure News | 1 November 2023
South Africa’s construction industry is facing a mounting crisis as organised crime wreaks havoc on construction sites across the country. Armed groups, commonly referred to as ‘construction mafias,’ are routinely targeting these sites, intimidating workers, and demanding a share of project profits or jobs, often resorting to threats of violence.
Morag Evans, the CEO of Databuild, has sounded the alarm, emphasising the need for contractors to resist these so-called ‘business forums.’ She warns that if left unchecked, this menace is poised to escalate. What initially emerged in KwaZulu-Natal has now spread into Gauteng, the Eastern Cape, Mpumalanga, and beyond.
The origins of this crisis can be traced back to regulatory changes in 2017 when new regulations to the Preferential Procurement Policy Framework Act (PPPFA) mandated that 30% of the contract value on state construction contracts be allocated to designated groups, including black South Africans, women, and people with disabilities.
Unfortunately, these regulations have been misunderstood and exploited by the construction mafia, causing widespread disruption even on private sector sites. These criminal groups demand either a 30% stake in the project or 30% of the total contract value in cash as “protection” against violent disruptions and work stoppages. These demands not only disrupt construction activities but also result in severe financial consequences for businesses, including black-owned small and medium-sized enterprises (SMEs). Projects often experience months-long delays, leading to skyrocketing costs. Notably, construction insurance policies do not always cover the damage or loss caused by these disruptions, resulting in financial ruin for many.
Euan Massey, a construction attorney, shed light on the severity of the situation in a recent interview, describing the modus operandi of these criminal elements. He explained, “At the outset of a project, they invade the construction site, walk into site offices heavily armed and threaten individuals or their families. No progress can take place until their demands are dealt with. This can also extend to violence and, in the worst cases, has resulted in murders.”
In response to the crisis, Cape Town launched a campaign in October to combat related crimes in the construction sector. Cape Town Mayor Geordin Hill-Lewis revealed that the city is allocating R55 million in 2023 for additional security to protect targeted sites, allowing construction to proceed. The local government has also amended its contracts with contractors, stipulating that they may not claim compensation for construction delays unless they report extortion to the police.
Apart from the menace of construction mafias, the construction sector faces additional challenges, such as disruptions caused by the COVID-19 pandemic, rising unemployment, and business liquidations. These challenges could exacerbate illegal site invasions as the unemployed labor force becomes increasingly desperate to secure work.
Massey pointed out that legal measures can be taken to address the situation, as various Acts address the prevention of organized crime and intimidation. However, one major obstacle is that individuals threatened by these mafias are often intimidated and reluctant to approach the police.
Amid these daunting challenges, Morag Evans has highlighted the potential of technology as a powerful tool against construction mafia invasions. Strategies involving the use of webcams, drone surveillance, robot guards, and GPS technology can significantly enhance site security, ensuring continuous monitoring and swift detection of any unauthorized access or activity.
Emphasising the importance of cooperation between contractors, law enforcement, and politicians to safeguard workers and the success of construction projects, Evans urged the demarcation of sites with access-controlled entry and exit points, robust safety measures, and the utilization of legal avenues to mitigate violence and disruptions.
“Harassment, violence, and extortion are not the means to achieve transformation in the construction industry. Such actions are criminal in every sense of the word and cause more harm than good,” said Evans.
Reflecting on the economic impact of these criminal activities, Massey estimated, “Approximately R68 billion has been lost due to the construction mafia, but the cost to society is even greater. For example, a school not being built means children lack education.” He stressed the need for a holistic approach involving all stakeholders, rather than a reactive response through the police. The government must identify projects where the 30% target is achievable and designate groups that can help achieve that goal.
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.