President Cyril Ramaphosa
By Thabo Mosia
In his weekly newsletter dated Monday, 17 February 2025, President Cyril Ramaphosa declared that “South Africa’s infrastructure drive is gathering pace.” He emphasized that to achieve the economic growth necessary for job creation, the nation requires increased construction activities and consistent infrastructure maintenance. However, he acknowledged that criminal syndicates, commonly referred to as the “construction mafia,” pose a significant threat to these efforts.
The Role of Infrastructure in Economic Growth
President Ramaphosa highlighted the critical importance of infrastructure development as a strategic priority for the government. He noted that investments in airports, roads, railways, public transit systems, water, energy, and telecommunications infrastructure are vital for driving economic growth. Such developments have a multiplier effect, enhancing productivity, creating jobs, and improving the delivery of basic services.
Historical Challenges in Infrastructure Investment
For many years, both public and private sector capital investment in infrastructure experienced a decline. This downturn was attributed to a challenging economic environment, the diversion of resources through state capture, bureaucratic obstacles, and low investor confidence. These factors collectively hindered the progress of essential infrastructure projects.
Recent Surge in Infrastructure Projects
Recent reforms and initiatives have led to a resurgence in infrastructure development. A report by Nedbank revealed that the total value of new projects announced by both the public and private sectors in the previous year amounted to R445 billion. This figure is more than double that of the preceding year and represents the largest fixed investment in infrastructure in South Africa since 2021. Notably, over 78% of this investment originated from government and state-owned enterprises.
Private Sector Participation
While the private sector’s contribution to infrastructure development lags behind that of the state, there have been significant commitments. In 2024, private entities announced investment plans totaling R95 billion. These include an R18 billion mixed-use development in Gauteng, a R4 billion investment by Volkswagen to upgrade its Kariega facility in the Eastern Cape, and the establishment of a new private university in the Western Cape.
Strategic Infrastructure Projects (SIPs) and Implementation
The government has outlined numerous infrastructure projects across the country, encompassing water and sanitation, human settlements, renewable energy, recreational, heritage, and maritime infrastructure. Additionally, efforts are underway in road rehabilitation, refurbishing state-owned buildings to attract investors, and upgrading health facilities.
Infrastructure South Africa, established under the sixth administration, leads infrastructure planning, management, and delivery. To date, 34 out of 50 designated Strategic Infrastructure Projects (SIPs) are in the implementation stage, with a combined value of R281 billion. An additional pipeline of catalytic projects worth R21 billion is set to commence this year.
Addressing the Construction Mafia Threat
A significant impediment to infrastructure development is the disruptive activities of criminal syndicates known as the “construction mafia.” These groups have been responsible for halting over 180 projects since 2019, affecting projects worth more than R63 billion. Their tactics include extortion, intimidation, violence, and sabotage, demanding up to 30% of contract values, which undermines procurement integrity and delays critical infrastructure delivery.
The emergence of these groups is partly attributed to the exploitation of the Preferential Procurement Policy Framework Act (PPPFA). While the Act aims to promote economic transformation by allocating 30% of public procurement contracts to historically disadvantaged individuals, these syndicates misuse its provisions to justify their unlawful demands.
Government’s Response to Construction Site Disruptions
In response to these challenges, the South African Police Service (SAPS) has intensified efforts to combat such criminality. Economic Infrastructure Task Teams are making progress in addressing these issues. During the National Construction Summit on Crime-Free Sites, stakeholders agreed to collaborate to tackle construction-site disruptions. Measures include enhanced security on sites, community engagement, and the development of the emerging construction sector. These initiatives have led to a decrease in construction stoppages.
Public Works and Infrastructure Minister Dean Macpherson has acknowledged the severity of the threat posed by these “construction mafias.” He emphasized that such criminal activities deter investors and hinder essential infrastructure projects crucial for economic growth. Macpherson announced plans to collaborate with various state actors to develop a national strategy to combat these gangs. Additionally, the government is exploring new funding models and public-private partnership reforms to attract private sector investment.
Economic Impact of Construction Disruptions
The construction sector is a major source of employment in South Africa, accounting for significant job increases between the second and third quarters of the previous year. However, disruptions caused by criminal syndicates have jeopardized this progress. For instance, ArcelorMittal South Africa announced the closure of its long steel plants in Vereeniging and Newcastle, a decision that threatens 3,500 direct jobs and could lead to a domino effect, resulting in the loss of up to 100,000 additional jobs across multiple industries. The closures are attributed to factors such as stagnant growth, high operational costs, and the impact of criminal activities on the industry.
Collaborative Efforts to Combat the Construction Mafia
Addressing the construction mafia requires a multifaceted approach involving law enforcement, industry stakeholders, and community engagement. The government has revised regulations for public-private partnerships to unlock private sector expertise and funds for infrastructure. Infrastructure South Africa has launched a project preparation fund worth R180 million to prepare and package infrastructure projects across government, ensuring that construction projects commence faster and are completed sooner.
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