PRESS RELEASE

Construction Extortion: A Growing Threat to South Africa's Economy

Pretoria, South Africa

Cape Town, South Africa – February 20, 2025 – The Construction Extortion Conference held in Cape Town on 20 February brought to light the severe and far-reaching impact that extortion is having on South Africa’s construction industry and the broader economy. Extortionists, operating with gang-like “mafia” tactics, are infiltrating various sectors across the country, threatening businesses of all sizes, including small, medium, large, public, private, and international enterprises.

The conference featured a keynote address from the President of the ACFE SA Board of Directors, Len Coetzee, along with insights from other industry experts, who shared their expertise on this pressing issue.

The so-called “Construction Mafia” has been a destructive force in the industry since 2015, originating in KwaZulu-Natal. These criminal groups have been obstructing progress by threatening, extorting, and even resorting to violence, including the assassination of construction workers. Over time, this menace has spread to other provinces and industries, with the mafia now also targeting sectors such as transport and taxi services. This has caused delays in construction projects as workers are left stranded, unable to reach their work sites.

The repercussions of these illegal activities have expanded beyond construction, with the term “construction extortion” now being replaced by “infrastructure extortion,” as the impact is felt across a wide range of industries. The economic cost of these disruptions has reached billions of rand, severely hampering South Africa’s progress.

Experts at the conference denounced the distorted ideology propagated by these extortionists, who claim an entitlement to 30% of income from law-abiding businesses. This false perception is based on a misinterpretation of the Preferential Procurement Policy Framework Act, 2000 and the Preferential Procurement Regulations, 2017, which extortionists falsely use to demand illegal payouts from construction companies under the guise of subcontracting obligations.

Project managers at the conference were urged to adopt transparent and appropriate procurement processes in line with the PPPFA Regulations and to establish robust security measures on construction sites. Most importantly, they were advised to never give in to extortionists’ demands, as compliance only leads to further demands for payments and tenders.

Legal experts emphasised that companies have legal resources to protect themselves, with protocols in place to obtain interdicts and court orders to shield businesses from these gangs.

South Africa's economy and the growth of its infrastructure are being severely threatened by these unlawful activities. The time to act is now to protect the construction industry and safeguard the future of the nation's economy. The Construction Extortion Conference underscored the urgent need for collaboration among businesses, law enforcement, and government to confront and eradicate these criminal networks.

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For more information or media inquiries, please contact:

Zanél Jordaan

+27 (0)12 346 1913

zanel@acfesa.co.za

ACFE SA

acfesa.co.za