Business organisations say the scourge of extortionists demanding money from businesses for protection is spreading from construction and mining to other sectors.
This escalation comes as data suggests that criminal activity shaves up to 10% off the country’s GDP.
Business for SA (B4SA) chair Martin Kingston said businesses were extremely vulnerable to such activity, whether it was organised or not.
“It has an effect on the smallest of businesses — and on very large businesses too. For example, the work we are doing on electricity and logistics is that it is being debilitated by infrastructure theft, which undoubtedly is a manifestation of organised crime.
“We have raised the broader environmental considerations with the government. It’s worthwhile noting that the consequence of crime, we think, has been to reduce GDP in absolute terms by about 10%. I’m talking about crime and corruption in the broader sense of the term.”
He said reducing the incidence of crime and corruption by strengthening law enforcement would be a way to deal with the challenge while ensuring the independence of law enforcement agencies was not compromised.
“In our meeting with the president, we agreed that we needed to respond to this and the impact on GDP of crime and corruption. We need to focus on the investigation and prosecution of complex criminal cases, enhance skills and prosecutorial capabilities, and put in place a legal framework to capacitate law enforcement agencies.”
Kingston said that President Cyril Ramaphosa’s signing of the National Prosecuting Authority Amendment Act was a positive step. These interventions had put the country on the right trajectory, albeit slower than business would have liked.
He said business had committed to meeting the Presidency every two months to discuss crime and ensure it remained a priority.
Minerals Council SA said many mining companies were experiencing violence and extortion essentially driven by the pretext of demand for tenders, procurement contracts and community employment at the mines.
The council said this could occur before a tender was awarded, in which case it was aimed at companies, but in many cases the successful tenderers — often legitimate BEE companies — were also targeted. Such mafia-like activities in the construction and mining sectors delay and even stop projects.
“It often involves groups — sometimes armed — arriving at sites and demanding more BEE participation, contracts directly to themselves or to specific service providers, and community job opportunities, either in individual form or a combination of these demands.
“When companies refuse to deal with these unlawful business forums, unlawful protest actions ensue. Transport companies and essential services are also held to ransom. Trucks are forced to blockade roads and buses transporting employees are hijacked and used to transport community protesters to protest sites.
“Police, government officials and security officials are under attack and employees directly and indirectly receive death threats or are subjected to acts of intimidation by identified and unidentified groups and individuals.”
The national chair of the Federated Hospitality Association of SA (Fedhasa) Rosemary Anderson said the hospitality industry had crime-related problems, particularly due to late-night operations and cash transactions, but Fedhasa members had not reported recent disruptions to their accommodation or restaurant businesses.
She said while problems persisted, positive steps were being taken as successful private-public sector collaborations had reduced crime in some areas.
“Crime and extortion add substantial costs to businesses. While specific tourism industry data is lacking, the World Bank estimates crime costs SA about 10% of its GDP, with protection costs accounting for about 4.2%.”
A Codera Analytics report in 2024 estimated a tourist shortfall of 5-million to 10-million a year (0.7%-1.5% of GDP) due to safety concerns.
TimesLIVE
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.