The construction mafia moves to the townships

Written by Ciaran Ryan. Posted in Journalism

And how one consultant got them to leave. From Moneyweb.

The disruptive actions of those who storm construction sites and mines harm growth and lead to job losses. Image: Supplied
The disruptive actions of those who storm construction sites and mines harm growth and lead to job losses. Image: Supplied

No longer content to invade larger construction sites in KwaZulu-Natal and Gauteng, the construction mafia has moved into the townships.

Mpho Moropane, founder of Phoroza Trading & Projects, was awarded a R6 million contract for the construction of 50 houses in Soshanguve, north of Pretoria, by the Gauteng Department of Housing. No sooner had the contract been awarded than “representatives of the local community” arrived to demand their take – a whopping 50% of the budget.

They then went further than this, proposing to take over the entire budget and source materials for the project, leaving Moropane with little if anything other than an obligation to deliver the houses to the client.  

Moropane, who is from Soshanguve and knows the community well, recognised he had a bunch of chancers on his hands but felt powerless to deal with them. He called on construction consultant Canon Noyana for his advice.

Construction consultant Canon Noyana, fair but firm. Image: Ciaran Ryan

Noyana suggested calling a meeting with the “representatives of the local community” to find out what they wanted.

After listening to their plans to carve up the profits for their own benefit, Noyana leapt to his feet and informed the local thugs that they had no right to be present in the meeting and that they would receive nothing. Nada. The contract was fairly awarded to Moropane and he would employ local skills, as required in terms of the Preferential Procurement Policy Framework Act, but there was no room for uninvited partners.

“They were shocked that someone stood up to them,” says Noyana.

“Most times contractors are too intimidated and start entering into negotiations with criminal gangs. It’s time to put a stop to this, no matter where it happens.”

The gang left the meeting with their collective tail between their legs, but then launched a campaign of harassment by attempting to disrupt delivery of supplies and materials to the site. This too was thwarted when Moropane and Noyana enlisted the support of a local magistrate and senior police officers in the area.

The campaign of disruption came to an abrupt end.

With the local thugs sent packing, the project was completed within budget, and on time, says Moropane.

This was not the first time the mild-mannered Noyana had run-ins with the construction mafia.

“They’re looking for a free ride, and they’re entering township construction sites because they see the tactic working elsewhere,” he says.

“The only way we can revitalise construction in this country is by each one of us saying no to corruption and demanding a return to the rule of law. We have shown that it can be done.”

The problem of the so-called construction mafia – who prefer to call themselves “business forums” – started more than two years ago when armed gangs turned up at construction sites in KZN demanding 30% of the work, then 30% of the revenue, and in some cases 50%.

The problem has now gone countrywide, but is particularly rampant in Gauteng, according to Peter Barnard of attorneys Cox Yeats, who has fought off dozens of mafia invasions through the courts.

“The only reason it continues is because it is tolerated by law enforcement,” says Barnard.

“Hopefully, we will now see stronger law enforcement to bring an end to this after Finance Minister Tito Mboweni called for tougher action against the mafia [last] week.”

Read: Moves afoot to rein in the ‘construction mafia’

Mboweni in his budget speech last week seemed to have had enough of this lawlessness: “The disruptive actions of those who storm construction sites or mines harm growth and lead to job losses. Communities should expose such people to allow ministers [Bheki] Cele and [Ronald] Lamola [ministers of police and justice) to ensure that the law takes its course.

“I hope all South Africans join me in condemning this,” said Mboweni.

Some site invasions have turned violent, with construction staff held prisoner until money was handed over, and some have been shot.

Read: Construction sector braces for a stormy year

All of this stems from new regulations to the Preferential Procurement Policy Framework Act, which allows 30% of all contract value above R30 million on state construction contracts to be allocated to certain designated groups, including black-owned small and medium-sized enterprises.

The regulations do not apply to private sector construction contracts, but this has not deterred the local forums.

“We are pleased with the [government’s] commitment to arrest criminal gangs that disrupt work on construction sites. It is a form of anarchy that has no place in any progressive society,” said John Matthews of Master Builders South Africa (MBSA).

The problem will now be dealt with by specialised units of the South African Police Service (Saps) and the National Prosecuting Authority. “It is the first step that will provide immediate relief to contractors who have construction sites in limbo, and we most welcome the commitment. We will be following up with the [Saps] on how to prevent further disruptions,” said Matthews.

Site invasions by armed extortionist groups have been cited as one of the leading causes of the decline in construction activity in the country, causing company closures and loss of employment, says MBSA.

Read: Construction industry in survival mode

In the last three years, several large construction companies such as Group 5, Basil Read, Liviero, NMC and Esor Construction have closed operations, while many of the remaining firms have reported financial difficulties. Sluggish economic growth, a decline in government infrastructure spending, late payment of contractors by the state and the lack of capacity to undertake public projects with approved budgets have been recorded as other leading causes of the problem.

President Cyril Ramaphosa announced R700 billion in infrastructure development in his state of the nation address earlier this year, but no further details have been provided.

Read: Construction sector welcomes R700bn ‘project pipeline’

Mboweni has committed to providing R10 billion towards a R200 billion infrastructure finance programme by the Development Bank of Southern Africa.

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.