The construction mafia has caused major disruptions to over 180 construction projects, collectively worth R63 billion, since 2019, according to Deputy Finance Minister Ashor Sarupen.
Speaking at the National Construction Summit in Durban on Wednesday, Sarupen highlighted the growing threat of armed gangs that invade construction sites, demanding up to 30% of the project value or halting work altogether. These criminal groups exploit a 2017 State of the Nation Address by former President Zuma, which allocated 30% of contract values for local community development. Sarupen referred to this extortion as “weaponized disruption.”
A declaration was signed at the summit by the Public Works and Infrastructure Department, police, National Treasury, and the Construction Industry Development Board, committing to a united effort to combat these criminal activities and protect construction sites.
Impact on Economy and Small Businesses
Sarupen further noted that the rise of extortion within the construction sector has broader economic implications, contributing to a 9.3% loss of South Africa's Gross Domestic Product (GDP), according to the World Bank. Extortion itself accounts for 2.7% of GDP, while firms are forced to spend an additional 4% on external security to protect their projects.
The ongoing disruption is also affecting the completion of essential infrastructure, such as bridges in flood-prone areas like KwaZulu-Natal, which has further isolated communities. The delay in these projects has a ripple effect on local services and housing.
Impact on Small and Black-Owned Businesses
Sarupen highlighted that the construction mafia has been particularly damaging to small, medium, and micro enterprises (SMMEs), especially black-owned businesses. Many small firms face the choice of either paying extortion fees or reporting the issue to the police, often leading to financial ruin due to project stoppages.
“The stoppage time becomes costly, especially for emerging firms with razor-thin margins,” said Sarupen. “Some businesses have been forced out of the market as a result.”
Government's Commitment to Action
Minister of Public Works and Infrastructure, Dean Macpherson, addressed the issue, vowing that the government would no longer tolerate lawlessness in the construction sector. “Decisive action is underway to dismantle the criminal syndicates that are disrupting critical national projects,” Macpherson stated.
The government’s commitment signals a strong push to protect the integrity of the construction industry and ensure that essential infrastructure projects can proceed without the threat of criminal interference.