Construction mafia costs SA's economy R63bn in five years

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The National Construction Summit on Crime-Free Construction Sites took place in Durban today, bringing together key stakeholders from government, law enforcement and the construction industry to address the growing crisis of crime on construction sites.

Now, from extortion and intimidation to violence and sabotage, these challenges often driven by the so-called construction mafia have disrupted over 180 projects and cost the South African economy an estimated 63 billion rand in the past five years. Now, to help us unpack the outcomes of the summit and the strategies being developed to combat these issues, which joined by Mulnany Dada, CEO of the Construction Industry Development Board,

Bongani, a very good evening and welcome to power business. Oh, thank you very much. And good evening to you and to all your listeners. Now, Bongani, what are the most prevalent types of crimes really currently affecting construction sites in South Africa? And how do these impact project timelines and budgets, you know, as we hear this construction mafia being talked about quite a bit now? Yeah, the most common really is when

People pretending or perpetuating to be representing communities, going to construction sites, demanding money, initially a subcontracting opportunities, but it ends up being money for protection. So that's the most common one really in our research. But there are other aspects where there's violence on sites, where people use violence means to intimidate contractors, infrastructure clients in order to stop projects when they're demanding participation

in legitimate ways. And that really cost the industry quite significant amounts of money. Plus also it has resulted in a few deaths or quite a few deaths where people have been killed in construction sites. Projects of fish shells and infrastructure of fish shells have been killed around that. So really the serious impact on this is right. It delays service delivery in terms of how quickly we can finish projects.

And then waste a lot of money that is intended for infrastructure when we have to pay for the stoppages that happens on site. And then the most other aspect weight actually impacts on its impact really on employment in the sector. Because the sector has a huge multiplier effect.

when it comes to employment of the skilled and unskilled workers in the industry. Quite a significant disruption, you know, that you've outlined their money, especially, you know, those disruptions leading into murders really quite concerning there. But talk to us about, you know, what is the board stance in on the significant economic impact as you outline and how is the board working to mitigate these disruptions? We have to work with our partners across

the various stakeholders that we are working with. We have to work with law enforcement to really decisively deal with the criminal elements within this particular problem, that complex problem that we are dealing with. But we also have to work with infrastructure clients on how to best put out projects in a way that it is developmental and we can accommodate general businesses for inclusive growth of the industry. We do that by putting out best practices

capacitating our infrastructure clients and also regulating aspects that are relating to infrastructure procurement in a way that we can genuinely say that there has been development for genuine local businesses and also communities, but still ensuring that projects can be delivered within projects and timelines. So that's really the focus of the CATP, but we have to work with our partners. Like today,

We had an account needed into a declaration, a double declaration on free crime-free construction sites where we are putting commitments from the Treasury, putting commitments from SAPS, putting commitments from infrastructure and public works to ensure that we can work together to achieve these meaningful goals that was discussed here and proposed.

by the various groups that were available here in the summit. Yeah. And now, Bongani, you know, we've heard from government that infrastructure is the key to growing South African economy. In your view, how then does the presence of the construction mafia undermine not only the integrity of the construction industry, but also South Africa's broader economic developments and infrastructure goals? For meaningful growth of any industry, you need to instill

solid confidence and confidence that is based on a crime-free construction site, a crime-free environment, and also a strong project pipeline so that people can invest in their construction businesses. And when companies invest in their construction businesses, we get a lot of innovation. We also get to be able to do projects more efficiently. So that's the first aspect. We need to deal with the sentiments. And I think a program like this

with the commitments that have been presented here by Minister McPherson, Minister Sen. Mnuchin, of police, and the developments of finance and all other entities that were here are also working towards instilling confidence to the contractors of South Africa to say invest in your businesses, you will be protected from the criminal elements. And I think the message was quite clear on that. The second aspect is that we're talking about how do we practically put out projects

in a developmental manner, but putting them out where the private sector can respond, timelessly and also efficiently to this particular project. That also adds on the confidence, but it also lowers the risk or the cost of doing business for our contractors that were also present in this particular summit. So those become two pillars towards a really, it's lighting the construction industry. And that coupled with the solid project pipeline, which our colleagues

from infrastructure South Africa. We're also talking about it really will help towards the growth of the industry in a more sustainable and efficient manner. Given that context, you've just outlined the messaging from the various ministers. Given the scale of the financial loss then, how can government and industry stakeholders collaborate to reduce the influence of criminal syndicates and restore confidence in the construction industry?

Minister McPherson proposed and laid out a social facilitation framework that must be adopted by the country. And the approach we are taking is that social facilitation and cognitive engagement framework must also be informed by how businesses want us as a sector to respond to how we deal with these particular aspects of social facilitation in projects. So that one is quite helpful because we will have a document or an approach

that will ultimately be adopted by most infrastructure clients, if not all, that also has the influence with an understanding of how business wants us to do it, with a very strong roots on the research that has been done, and that many other infrastructure clients, like the SANDRA, that were sharing their experiences. So that's one of the major aspects that will help us in terms of solving the issue. And along with the other declarations that were made here publicly,

around issues or around legislation, around issues around enforcement, law enforcement, contractor development and skills development in the center and obviously social facilitation. Those ones were creating a solid step in stone for us to reclaim the lost ground on this particular issue.

And then earlier, when you were sort of outlining, you know, the types of crimes are currently affecting construction sites in South Africa, mentioning earlier, you know, that sometimes people come purporting to be members of the community. But how then does the CI DB view then the role of community engagement in addressing the root causes of the construction mafia's actions, you know, could improve relationships with local communities, help in preventing such criminal activities?

You see, when you listen to how the MSC of public works and infrastructure from the Eastern Cape was given the case study on the Ontario Bridge along with our colleagues from Sandral, it shows how genuine engagements with communities, any on the project set us up for success in the long run. We've learned a lot of lessons from such, including even the private sector where colleagues

from the oceans development, shared their experiences around how they've engaged communities and keeping continuous engagement with communities around development so that we can start out the opportunities that could be available for local businesses and also the thinking of the developers. So having that private sector, public sector, experiences really enriched the discussions as to how we should view social facilitation

as a tool towards getting genuine businesses involved any on in our project preparation and execution. So that will become also enhance the framework that we will be putting out for public comments so that we can get more insight on that. So coming to participation, not as a tick box exercise of just informing communities that there is a project like this happening for this duration,

for that demand. We explain the intent. We explain how we've given the local circumstances a consideration in how we've even packaged the projects for maximum impact on some of our social economic goals. That becomes really, I think, a solid foundation for communities to take ownership and also for communities to be the first line of defense against the criminal elements or the bad access within the sector.

I always say, if in a community a project is benefiting general local businesses is providing skills development to keep that grew up in those areas, it becomes very difficult to point a thing and say there is no development there where you can point on direct beneficiaries from that particular community. As opposed to when we do projects in remote areas or rural areas,

and then being even the basic subcontracting companies that are coming from afar, then criminal elements get legitimate to say, we are going to fight on your behalf because there is no development that is happening. So I think the discussion and quite robust discussions happened in the commission that was dealing with social facilitation helped to really enrich the government's approach towards social facilitation.

community buy-in so critical there. But that's all the time we have this evening, Bongani. Thank you so much for speaking to us this evening.

All right, fantastic. That was the Bongani Yajla CEO at the Construction Industry Development Board talking to us about the National Construction Summit on crime-free construction sites that construction mafia costing South Africa's economy 63 billion rand in five years. You've been listening to a Power 98.7 podcast. For more podcasts visit power 987.co.za or subscribe wherever you get your podcasts.