South Africa has witnessed a troubling rise in “construction mafia” incidents. This term refers to organised groups that have infiltrated the construction industry, using intimidation, violence, and extortion to force their way into lucrative projects.
The impact of these groups has been profound, leading to delays, increased costs, and a chilling effect on investment in the real estate sector, said Lulama Lobola, senior associate in Cliffe Dekker Hofmeyr’s Real Estate Law practice.
To put it into perspective, the City of Cape Town official Robbie Roberts said at a workshop hosted by Business Against Crime South Africa earlier this year that extortion had put R3 billion in construction projects at risk, with the city protecting 22 sites, six of which had been shut down.
According to the legal firm, the construction mafia, also known as “business forums”, began to gain prominence around 2015. These groups often justify their actions by claiming to represent local communities seeking a share in the economic benefits of construction projects.
Initially, these groups targeted smaller projects, but their reach has since expanded to major infrastructure developments, residential complexes, and commercial properties.
Their modus operandi typically involves demanding a 30% stake in contracts and when developers refuse to comply, these groups resort to violent tactics, including site invasions and equipment sabotage.
Impact on developments and the real estate sector
The activities of the construction mafia have far-reaching implications for the real estate and construction sectors, said Lobola, including:
Lobola said that addressing the rise of the construction mafia requires a multi-faceted approach.
“There is an urgent need for more robust law enforcement to deter criminal activity in the construction sector. This includes not only prosecuting those involved in extortion and violence, but also protecting developers and contractors who stand up to these groups.”
The legal expert said that developers should engage more effectively with local communities to ensure that legitimate concerns are addressed.
By fostering genuine partnerships with local businesses and workers, developers can reduce the influence of criminal elements that exploit community grievances.
“The government should consider policy reforms that make it easier for developers to comply with local participation requirements in a way that benefits both the community and the project,” said Lobola.
Clearer guidelines on community involvement in construction projects can help prevent the manipulation of these processes by criminal groups, she said.
