Mafias killing South Africa’s cheap fibre dreams

Construction mafias around South Africa are increasingly hindering the service delivery of fibre network operators (FNOs), causing an increase in operating costs and limiting its rollout.

A panel of industry experts at ZANOG@iWeek discussed why fibre-to-the-home prices have recently increased.

Explanations included price hikes being a natural market phenomenon, FNOs initially charging too little after the land grabs, and vandalism and servicing costs becoming significant expenses.

Link Africa’s chief sales and marketing officer, Mark O’Donoghue, said the company had accrued a significant monthly security expense of R1 million to protect its staff and facilities.

The reason for this inflated security budget is the result of construction mafias. “When you mention the construction mafia, we deal with it daily,” O’Donoghue said.

He said this was most prominent in the rural areas of KwaZulu Natal, where Link Africa set up most of its initial infrastructure.

“It’s gotten to the point where they’ve arrived at our offices with AK47s, put staff in boardrooms and held them hostage so they can see our books to see where we’re installing infrastructure and why we’re not using their services.”

However, it’s not only Link Africa that’s experiencing this problem.

In 2018, Vumatel withdrew from the rollout of fibre infrastructure in KwaZulu-Natal due to threats received by staff members that placed their safety at risk. It only returned much later.

According to MetroFibre’s head of fibre-to-the-home Jacques de Villiers, “the construction mafia groups posing as community business forums” remain one of the most challenging obstacles to fibre rollout across South Africa.

What are construction mafias?

Jacques de Villiers, MetroFibre’s head of fibre-to-the-home

Construction mafias, or “business forums”, use extortion to control public sector procurement opportunities within the construction industry.

These groups affected over R63 billion worth of construction and infrastructural projects in 2019 and have continued to hinder multiple industries nationwide.

According to a paper by Amoah et al. titled “The Emergence of Construction Mafia in South Africa: The Implication on the Construction Industry,” the business model of construction mafias rests on two policies.

Those policies are the Broad-Based Black Economic Empowerment Act 53 (BBBEE) of 2003 and the Preferential Procurement Policy Framework APFAPPFA) of 2000.

The BBBEE Act’s stated goal is to promote “black people’s participation in the management, ownership, and control of South Africa’s economy” to rectify the imbalances created by apartheid.

From this policy stems the PPPFA, “which mandates that 30% of all government construction projects be designated to selected groups such as black South Africans, women, and people with disabilities.”

However, the PPPFA is misinterpreted by construction mafias.

The gangs use extortion to force construction stakeholders to either provide them with 30% interest in the project’s value or 30% of the construction value in cash as protection against more violence and stoppages — and other gangs.

This exploitation of the policy has been condemned and declared illegal by the National Treasury.

“You have to hire their security companies to look after their staff that you are forced to employ,” O’Donoghue said, describing the difficulties in cooperating with the forums.

He also says permission is required to enter a particular gang’s territories. Ignorance could result in equipment damage or theft and even violence towards staff.

This was the trouble experienced by Vumatel when rolling out fibre infrastructure in KwaZulu-Natal.

“Due to incidents of intimidation and threats made by various groups in KwaZulu-Natal, it is not safe or practical for the contractors to continue working in the field at the moment,” Vumatel wrote in an email notifying customers about the suspended rollout.

“There is huge concern about construction mafia groups who demand a cut in building projects around the country, sometimes even resorting to violence and intimidation to get their way,” said Jacques De Villiers.

It is important to note that not all business forums exploit these policies and are driven by beneficial economic change, using the policies as intended.

Mitigating the threat of construction mafias

Link Africa’s R1 million security budget is not sustainable or feasible for many small businesses. “We have to hire private security as the police are completely ineffectual,” O’Donoghue said.

Specialist investigator Mark Bolhuis told eNCA that “it’s one of the most lucrative crimes committed in the country because it involves so many authorities.”

“Crime can only flourish when there are authorities involved, and when I mean authorities, I’m talking about municipality officials, government officials, police officials, and businessmen, as well as syndicates, gangsters, mafiosos, and criminals that can commit extremely violent crimes, intimidation, extortion, etc.”

According to Amoah et al., the only way to deal with these injustices is by relying on the law and implementing a situational crime prevention method.

The situational crime prevention method focuses on the immediate causes of the crime and the opportunities that allow it to prevail.

It relies on proactive law enforcement, which needs to improve drastically for this to be effective.

An alternative solution is to build solidarity within communities through shared development goals, empowering members to take action.

O’Donaghue said Link Africa is settling with the latter, which entails “[having] staff who are elders in the communities to stave off certain situations and ensure everything is free-flowing”.

However, territories often change authority from one gang to another, making it difficult to mitigate violence.