The 23 classroom construction project at Menzi High School, south of Durban, faced more than two years delay because of the threats from the construction mafia. Picture: Steven Makhanya
By Mohau Mphomela
The new Minister of Public Works and Infrastructure, Dean Macpherson, has been in the United Kingdom engaging with infrastructure investors to secure potential partnerships. He is on record as saying that he wants to make South Africa into one giant construction site.
This is encouraging to the construction industry, which has been battling severe headwinds for many years. But even if government’s long-promised focus on infrastructure development does finally come to pass the problem posed by the Construction Mafia on the ground remains a major stumbling block to any recovery of the industry, and especially its ability to create more jobs.
The Construction Mafia remains an ever-present threat to projects in both the public and private sectors – but there’s a limit to what the industry can do. We need to see a ‘joined-up’ approach from the state, which includes the Justice cluster, to ensure that these malefactors are brought to book and construction sites are protected. Criminals need to be held accountable.
Gavin Morrow, the CEO of construction company W3O and Vice-President of MBA North, agrees that a consolidated approach from government is important. He says that the activities of these illegal, so-called “business forums” are driving up the cost of doing business and reducing the industry’s margins.
“Our margins are already paper thin, and when a construction site is captured by these criminals, the full cost of the stoppage is borne by the contractor,” he says. “In some cases, this pushes businesses into distress. These events are also often very violent, and can be the final straw that convinces the owner that it is no longer worthwhile to keep the business open.”
In the past few years, several industry stalwarts and long-time members of MBA North have been forced into bankruptcy or business rescue.
Morrow identifies the lack of policy clarity as another issue that gives oxygen to the Construction Mafia. The current Preferential Procurement Policy (PPP) does not properly define the 30% participation requirement and is thus used by so-called “community organisations” to demand 30% of the total project value, rather than 30% of the work that falls within the remit of the main contractor. In addition, the 30% figure is wrongly applied to private projects, as the PPP pertains only to public contracts.
Morrow’s firm, W3O, encounters these dynamics at varying levels of intensity on the majority of the projects it undertakes.
Jose Correia, the managing director at Tiber Construction, agrees that this form of extortion is very prevalent and getting worse. Correia says that his company generally finds that local contractors often agree to take on any work on offer just to get a foot in the door. These contractors then demand more money down the line to pay staff, even though their shortfalls can typically be attributed to poor business practices.
“The challenge is that expectations within the community are worlds apart from the reality of delivering work against tight deadlines and budgets,” Correia says. “It seems there is always a new business forum claiming it is entitled to the work and there is never enough work to service all these extortionists.”
It is now broadly accepted that in order to minimise the risk posed by the Construction Mafia, contractors need to adopt a proactive approach, liaising with SA Police Service (SAPS) from the get-go and appointing a community liaison officer to ensure good communication with the local community. All stakeholders should be shown the building and site plans, and a WhatsApp group can be created to ensure constant communication. Entry to the site should be strictly controlled, with detailed records kept of everybody who enters it.
It's a good practice to erect a board at the entrance detailing what actions were taken to include the local community in the project.
However, these procedures cost money and, perhaps even more importantly, time – something that’s often in short supply on a building contract.
Business Against Crime South Africa (BACSA) is playing an active role in helping the industry coordinate an effective response to the challenge posed by the Construction Mafia.
Roelof Viljoen, National Project Manager at BACSA says that by following its guidelines, companies stand a better chance of minimising disruption.
Before construction commences, construction companies should make contact with BACSA, as well as the local SAPS.
“The SAPS has an obligation to protect against extortion, as with any other crime, so it makes sense to do everything possible to get them on board from the beginning,” he says. The purpose of a pre-meeting with the SAPS is to prepare for all possible crime risks related to the work and establish an agreed communication protocol to use in the case of any crime related to the construction site. “But if they fail to respond appropriately although duly informed of the crime committed, it’s worth knowing that the company has a service delivery claim against the SAPS.” However, the claim needs to be made before the end of the contract and witnesses need to be available.
“It’s worth remembering that the local police station might itself be infiltrated by the business forum – one should be ready to escalate if they are not doing what they should,” he says. SAPS Provincial Organised Crime Investigations coordinate law enforcement activity against extortion. Visible policing would be the most effective deterrent, but unfortunately resources are limited,“ Viljoen notes.
“The bottom line is that one can never give work in response to a threat,” he says.
Mohau Mphomela, Executive Director at Master Builders Association North.
BUSINESS REPORT