EDITORIAL: The industrial mafia cancer requires urgent attention

“I have prioritised our response to the growing problem of criminal groups that extort money from construction and other businesses. Specialised units — bringing together the SA Police Service and the National Prosecuting Authority — are mandated to combat these crimes of economic disruption.” 

So said President Cyril Ramaphosa in the state of the nation address more than two years ago in response to newspaper articles carrying comments from CEOs about heavily armed criminals masquerading as community representatives door-stopping construction sites, disrupting operations, and demanding protection money or a share in the value of the contract.   

One would be forgiven for thinking that this pledge to combat “these crimes of economic disruption” has gone straight to Ramaphosa’s long list of unfulfilled promises.   

It may be that Ramaphosa has not been idle since he helped the ANC roll into an election victory in 2019 on a promise to return the economy to a robust growth path that will put millions of South Africans into jobs and tackle endemic poverty.   

But at cursory glance, some of the steps he has taken, including a sweeping overhaul of energy policy, the laying out of steps to fix state-owned enterprises (SOEs) and the auctioning of much-needed radio frequency spectrum, have yielded very few positive results. It is a regrettable fact of history that he has presided over an economy that has shed jobs in almost every quarter since he took over, entrenching the kind of poverty that carries the risk of turning on its head the social compact that underpins our democracy.  

To this list of unfulfilled pledges, one might add Ramaphosa’s failure to stop the tentacles of the construction mafia extending beyond KwaZulu-Natal, where such operations have thrived for a decade by skimming off state construction contracts. A research report in June by the Global Initiative Against Transnational Organised Crime — a Geneva-based non-profit group — found that in 2019 at least 183 infrastructure and construction projects worth more than R63bn had been affected by these disruptions across the country. 

That is not an insignificant problem. It is alarming enough to make it difficult for any business leader to justify to wary investors the idea of capitalising large projects, just as the sector more than ever needs private capital to rebound after the looting during Jacob Zuma’s disastrous administration. 

Worryingly, the evident success of the construction mafia’s tactics has resulted in the problem snowballing in severity and scope, spreading from one province to the next, and from one sector of the economy to the next. It’s rapidly becoming a national crisis that needs more than just empty words in response. 

For evidence of that, look no further than Transnet. The SOE’s efforts to clear the line after a suspicious derailment of a coal train earlier this week were hit by extortion and violence by armed members of an entity that calls itself the Ulundi Business Forum, whose leader, Musa Ngqulunga, told this newspaper that recovery efforts stopped because “all we want is for locals to be included in the projects”.

In order to protect itself from contractual obligations, Transnet was forced to fall back on what should be a seldom-used escape hatch known as force majeure. SA’s shipments of coal are likely to drop below the 50-million tonnes estimated by the mining industry group, the Minerals Council SA, before the derailment last week. The consequences for the fiscus, the economy and business confidence require no elaboration.

Transnet is not the only example of how nothing is off limits to this new scourge. Early last year, Orion Minerals, which stumped up R5bn to restart a zinc and copper mine in the Northern Cape that was mothballed in the 1990s, launched a blistering attack on the government, accusing the police of standing idly by when a group of people intimidatingly demanded contracts to provide services to the mine.

Eskom’s travails have been compounded by acts of sabotage and intimidation. It is not unreasonable to infer that intimidation and sabotage contributed in some way to the “unbearable pressure” that forced Eskom generation boss Rhulani Mathebula to quit this week.

Criminal activity on this scale appears to have been normalised, as researchers at the Global Initiative Against Transnational Organised Crime have found, with many businesses opting to co-operate with the criminals rather than face the consequences of resisting.

The success of the various industrial mafia is a result of the government’s incompetent handling of the problem, which is now developing into a national crisis that threatens to scare away capital and skills on an alarming scale, and harm most the communities these “business forums” claim to represent. It is time for President Ramaphosa to ask his police minister to act before the situation is beyond control.