Sekadi Phayane, CEO of the South African Institution of Civil Engineering (SAICE), says “decisive action” is needed to deal with the construction mafia, which is having a devastating impact on infrastructure development, economic growth and jobs.
“Projects have been delayed, sites have been abandoned, business confidence has diminished. All of which has had a huge impact on the delivery of infrastructure, jobs and growth.”
She cites a study showing that 183 projects worth R63bn were stopped by the construction mafia in 2019 alone, constituting a third of Infrastructure South Africa’s construction book projects value.
“We cannot afford to have a third of major social and infrastructure projects not going ahead in South Africa.
The construction mafia has targeted the government’s 30% public procurement policy “to basically get 30% of each project for doing absolutely nothing”, she says. As a result, far from promoting transformation in the construction sector as intended, the procurement policy has dealt it a setback.
“Proper, legitimate small businesses are really suffering and are unable to participate in the greater construction economy due to these extortion practices,” Phayane says.
Before the construction mafia emerged, the sector was a significant enabler of the economy, with major investments in big projects.
Now, although there’s a pipeline of more than 150 projects worth R160bn that Infrastructure South Africa is overseeing, “there’s a lull in the construction industry because there’s not much investment in the project pipeline”.
“The construction mafia have made construction a very investment-unfriendly environment. They’ve caused a big decrease in the morale of engineers and done great harm to the image of our industry internationally.”
Civil engineers have been leaving South Africa for the past 10 years in increasing numbers to escape being threatened, intimidated and harassed, she says. They're made to sign off on projects that are incomplete, and do other things that violate the engineering institution's code of ethics.
The dangerous environment created by these extortion mafia has accelerated the exodus of our members", says Phayane, a transport engineer for 20 years before becoming SAICE CEO last year.
The real issue at hand ... is a generally corrupt society, a lack of ethics and a lack of dealing with criminal elements in sectors beyond the construction sector. There’s a lot of systemic corruption that has to be dealt with
At the same time, construction companies have been leaving because of the hostile environment and lack of law enforcement. “In areas where construction mafias are rife, there is little action against them.
The SAICE is committed to the transformation agenda implicit in the 30% procurement policy, but the way it is being implemented is anti-transformative, Phayane says.
“There needs to be greater education and awareness to ensure that communities know that this 30% is targeted at skills development and not just getting money for nothing because a construction project is in their area.”
The government’s procurement policy, for all its noble intentions, has not had a transformative effect, she says. It has been hijacked by the construction mafia and utilised by them to control access to public sector procurement opportunities.
“If the transformation agenda is truly part of government’s focal point, something it really believes in, then greater work is required to ensure that the hijacking and extortion and blatant corruption caused by not enforcing this policy correctly is properly dealt with.”
The complicity of government officials and politicians makes this highly unlikely, she says.
“The reason there’s such a lack of desire to decisively deal with it is that the mafia are connected to law enforcement agencies and politicians. Institutions in the construction industry must continue making a noise about this until we force government to actually do some introspection and housecleaning.”
The SAICE is part of a working group formed a month ago by the Construction Industry Development Board and Black Business Council Built Environment with the department of public works & infrastructure and the Treasury to examine public procurement regulations and “how they should look going forward”.
Merely scrapping the 30% procurement policy won’t stop the mafia, says Phayane.
“Criminal elements will find a way to steal and disrupt whether it’s there or not. By just getting rid of the policy government will not have dealt with the real issue at hand, which is a generally corrupt society, a lack of ethics and a lack of dealing with criminal elements in sectors beyond the construction sector. There’s a lot of systemic corruption that has to be dealt with.”
She cites examples of entities such as the South African National Roads Agency that are dealing with the scourge at a community level through “real” community engagement and ensuring that local communities are involved in projects in ways that yield “real, tangible benefits”.
“The problem is community leaders who are susceptible to being corrupted by illicit business forums, who want short-term, shortcut benefits.”
She says so-called “business forums” are now also demanding 30% from private projects where the public procurement policy doesn’t apply.
As long as government officials and politicians are complicit and benefit accordingly there will be no incentive to end construction and other mafia, she says.
“We believe a systemic approach is required to combat these groups, and to monitor and have some form of accountability. A lot of the time we have received no feedback, no follow through in terms of effectively dealing with these groups. Nothing.”
There need to be safe reporting mechanisms for people who want to blow the whistle, she says.
“Intimidation doesn’t only happen on site, it happens on a day-to-day basis in terms of project management and the like. And people need to be able to report it safely.”
This is something else that is being looked at by the working group.
Why has it taken so long? “There’s been a general discomfort in terms of dealing with this issue,” says Phayane, but adds that it has begun to change.
The SAICE has been invited to a summit on “crime-free construction sites” organised by the department of public works & infrastructure this month in Durban.
“There has been a lot of energy coming from this administration to tackle this phenomenon, a lot of stakeholder engagements. But what we really want to see are policies and legislation coming out and being enforced, which is critical.”
She says industry participants in the working group are going to hold the government accountable to ensure it’s “not just another talk shop”.
“The time for talking is over. The construction industry is a critical enabler of economic growth. So if the government doesn’t want to see more job losses and more skills leaving the country, then they need to act decisively on this matter.”
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