Taking a cue from former Eskom CEO, André de Ruyter, who cracked down on mafia-like structures in the power industry, the construction industry is also raising its hand to pay attention to mafia-like set-ups in the sector.
According to the director and chief economist at Econometrica, Dr. Azar Jammine, who spoke at this year’s AfriSam budget session held in Parktown on February 24, 2023, the construction industry has shrunk by 20% since 2010, with some major names closing shop over the past decade and bit .
The names include Group Five, Basil Read, and others, with companies like Stefanutti seriously cutting back.
Also Read: Construction mafia incident down – Safcec CEO
Jammine said there are several reasons, but one of the most common is the presence of a mafia-like structure operating in the industry, imposing ideologies and crippling business across the board.
“Obviously there are many factors that cause the decline of the industry, but it is the decline of law and order where we see the inability of the police to block the criminal activities carried out by certain mafia forums, which is the result of an obsession with ideology, which affects the industry the most.
“As a result, we have seen a decline in international investment in construction in South Africa and a mass exodus of people with the job skills needed in the industry, especially civil engineers,” he said.
No choice but to leave SA
One such civil engineer, who spoke on condition of anonymity, said The Warga they had no choice but to close shop and take on a construction company from South Africa.
“These mafia-like people will come to your construction site, armed but not pointing a firearm, and ask to speak to the project manager. They will then start negotiations, trying to get 50% of the work contract for themselves. If you refuse, they threaten your workers and stop your operations,” he said.
“In identifying themselves as a developing business forum. Then they start with discussions. They are related to politics, so even if you report, nothing can be done.
Also read: Construction mafia creates crisis by disrupting infrastructure projects
“It got to the point where we had a big loss when they were going to negotiate. That’s when I decided enough was enough and left the country,” he said.
He wasn’t the only one with such reasons.
The level of systematic extortion is similar to Italy
The Consultative Council for the Civil Engineering Industry Lindie Fourie, in a media interview, compared it to the structure of mafia groups in Italy.
He said: “This is becoming more and more clear even though it has been a problem for many years… There are references that we have reached a level of systemic extortion similar to what Italy is experiencing with the mafia on its side. We have seen very violent incidents on the site, where contractors are threatened – sometimes kidnapped and even taken hostage.This happens to the point where some contractors feel they have no choice but to work with some of these entities.
So, international investors have been deterred by the political situation and have pulled back on investment.
Jammine stressed that construction companies are the best performing sector in the economy, driven by a lack of investment and company departures.
“This is unfortunate, because the construction industry is the most labor-intensive sector of the economy. But due to the lack of investment, we see the level of employment decreasing, affecting the overall GDP,” he said.
Jammine said that De Ruyter’s interview, in which he had talked about mafia-like structures today drew a battle line against certain ideologies that have long hindered economic growth.
“I hope that De Ruyter’s interview will highlight the problems that the sector has faced in the last decade, and that there is something that can be done, where we will see the economy grow again,” he said.
NOW Read: How the construction ‘mafia’ business model is jumping to other sectors