Mafias cost South Africa billions

The scourge of construction mafias in South Africa has cost the country R63 billion over the past five years through disrupted projects and the costs of protecting labourers and developers.

Public Works and Infrastructure Minister Dean Macpherson, on Tuesday, 19 November 2024, signed the Durban Declaration between his department, the South African Police Service, the National Treasury, and the Construction Industry Development Board.

The declaration aims to end disruption at construction sites across the county.

Speaking to 702, South Africa’s second Deputy Minister of Finance, Ashor Surapen, said there had been a reduction in extortion in the construction space with Macpherson and Minister of Police Senzo Mchunu taking a hard stance on such activities.

“The World Bank has said that when you look at the modelled effects of extortion on the South African economy over a certain period of time, it’s 9.3% of the GDP,” said Surapen.

“2.6% is the disruptions, then there’s the additional cost of security and the knock-on economic effects.”

He said construction mafias have cost the economy R63 billion since 2019.

Macpherson recently declared war on the country’s construction mafias during his keynote address at the National Construction Summit on Crime-Free Construction Sites on Wednesday, 20 November.

“We are gathering here today in Durban, KwaZulu-Natal, considered ground-zero for the so-called construction mafia, to take a stand and say enough is enough,” he said.

“We are drawing a line in the sand to say that lawlessness will no longer be tolerated. We will no longer be negotiating with criminals just to build roads, dams, schools, and hospitals that our people so desperately need.”

The summit’s participants included Mchunu, the Premier of KwaZulu-Natal, deputy ministers, MECs, and some of South Africa’s highest-ranking police officers.

Macpherson emphasised that the calibre of participants proves the government’s collective commitment to tackle the scourge.

“Let me be clear: this is not just another talk shop. Today, we are taking decisive action,” the minister said.

He had issued a warning earlier in 2024 when he said that construction mafias would be treated as enemies of the state and be dealt with accordingly.

“There is no room for negotiations or delays to our projects,” said Macpherson.

Construction mafias turning cheap fibre dreams into a nightmare

Construction mafias disrupt construction projects and actively intimidate fibre network operators (FNOs) and disrupt fibre rollouts.

Like with their illegal activities at development projects, the mafia tries to extort FNOs to use their services through violent intimidation, which slows rollouts and pushes up pricing.

In the case of fibre rollouts, they also threaten violence or the disruption of such projects unless they are paid “protection fees”.

In March 2024, Link Africa’s chief sales and marketing officer, Mark O’Donoghue, said the FNO spends roughly R1 million per month on security to protect staff and facilities from these organisations.

He explained that these criminals rely on intimidation tactics and even arrived at Link Africa’s offices with AK-47s and locked staff in board rooms while they went through the FNO’s books to see their rollout plans and why it wasn’t using them.

“You can’t use your own staff. You have to outsource to their staff,” he added.

Construction mafias also frequently shift territories. O’Donoghue explained that a fight may occur over a weekend where one group gets access to another area.

“So now you’re working in an area that you thought was part of one business forum,” he said.

This is particularly problematic for fibre network rollouts over long distances as the project could cover areas controlled by different construction mafias.

“We have to consult and hand off staff to the next forum area and the next,” said O’Donoghue.

“Be very warned if you get it wrong. Your staff will have a gun to their head. Your staff’s vehicle will be stolen, and your staff’s equipment will disappear. It is guaranteed.”