South Africa’s construction sector has seen its contribution to the country’s economy decline by 33.7% over the past eight years.
This decline has primarily been driven by the rise of the construction mafia, which often comes in the guise of ‘business forums’, in Gauteng and KwaZulu-Natal.
Mining, construction, and manufacturing, which continue to languish, are vital for the employment of low-skilled workers, who make up the majority of the country’s unemployed population.
Stanlib chief economist Kevin Lings said the performance of these sectors, particularly construction, was dismal considering the need for economic growth and employment.
The construction mafia first emerged in 2015, disrupting a handful of construction projects in Gauteng.
The phenomenon is now a nationwide network that has held the country’s construction sector to ransom, with JSE-listed WBHO and Stefanutti Stocks warning of its impact.
WBHO chairman Louwtjie Nel said in a letter to shareholders: “There is an urgent need for South Africa to prioritise upholding the rule of law. The adverse effects of not doing so are becoming increasingly obvious.”
“Until that starts taking place, construction mafias will continue to plague and invade projects and cause disruption to this valuable sector of the economy,” he said.
Roelof Viljoen, national project manager at Business Against Crime South Africa (BACSA), warned that construction mafias have become ubiquitous in South Africa with no sign of a reversal.
“Extortion in the construction sector has reached worryingly high levels, derailing and delaying projects worth billions of rands,” he said.