Construction mafia chase skilled engineers out of South Africa
Skilled and experienced engineers are seeking opportunities outside of the country due to the destructive impact of South Africa’s construction mafia.
South African Institution of Civil Engineering president Andrew Clothier said the construction mafia has had a disastrous impact on the sector.
Clothier told 702’s John Perlman that these groups often pose as business forums, but employ violence and other intimidation tactics to control public sector procurement opportunities.
These “forums” approach the construction companies seemingly in the interest of the local community where the construction is taking place and demand a stake in the contract.
These mafias often demand 30% of the contract’s value due to a misunderstanding of legislation.
According to the Preferential Procurement Regulations, 30% of any project valued over R50 million must be devoted to what is referred to as “local input.”
This has been misinterpreted as meaning the construction companies must employ people from the local community where the project is taking place.
This misinterpretation has led to fierce competition among small businesses in the areas where projects arise. In some areas, this competition has given rise to construction mafias.
“They do this through intimidation, and it’s not only intimidating the engineers on site, it also goes as far as threatening to intimidate their family and family members,” Clothier said.
“And they go as far as destroying property and disrupting site operations.”
Clothier said that, in 2019 alone, these groups affected more than R63 billion worth of projects.
There have been 96 cases of extortion recorded between January 2023 and February 2024 in the Western Cape.
Aside from monetary losses, construction mafias also lead to lost opportunities for emerging businesses, labourers, and people looking to learn construction skills who would have benefitted from the legislation as intended.
“Those are the people that this 30% is intended for – the emerging contractors, to upskill them, to increase their company turnover, and for other smaller enterprises to enter the construction industry,” Clothier said.
This has led to many people in the construction industry leaving the country, with Clothier identifying four reasons for this: more job opportunities, they consider South Africa a failed state, better overall opportunities in other countries, and in search of a better standard of living.
He said the countries these people move to are usually in the Middle East, Europe, and Australia, where there is a lot of infrastructure spending.

Alongside the construction mafia, Clothier said people in the industry have become pessimistic ever since the upturn for the 2010 Soccer World Cup when infrastructure was at a high.
“Ever since 2015 through to 2024, there’s been an extreme underspending on infrastructure. So, definitely, it does dampen the future.”
“A lot of engineers are leaving because of the lack of infrastructure spending. You can see it in the condition of the current asset infrastructure within South Africa. And that’s as a direct result of underspending on infrastructure.”
Infrastructure spending has been one of President Cyril Ramaphosa and the Government of National Unity’s talking points this year.
“From our largest metros to our deepest rural areas, we have a clear intention to turn our country into a construction site, as roads, bridges, houses, schools, hospitals and clinics are built, as broadband fibre is laid and as new power lines are installed,” the President said in his Opening of Parliament Address earlier this year.
“We must work to engender a culture of maintenance of public infrastructure and dedicate resources and establish systems to ensure this.”
“As the Government of National Unity, we are resolved to intensify our investment drive, encouraging and enabling businesses to invest in productive capacity.”
Compared to developed and other emerging markets, South Africa’s gross fixed capital formation (GFCF) is significantly low, hindering economic growth.
GFCF, also known as “fixed investment,” is a key macroeconomic indicator that measures the value of new and existing fixed assets acquired by businesses, governments, and households.
These assets include equipment used in production processes, factories, offices, residential dwellings, roads, bridges, railways, utilities, and intellectual property like patents, copyrights, and trademarks.
South Africa’s economic growth has been sluggish for years. Aside from a post-lockdown economic rebound in 2021, it has not achieved GDP growth above 2% in a decade.
TreasuryONE currency strategist Andre Cilliers attributes this partly to ongoing de-industrialisation and inadequate levels of fixed investment.
He said South Africa’s fixed investment makes up just 14.6% of GDP, compared to a typical 30% in healthier economies.
“This environment erodes confidence in the country’s ability to stimulate sustainable economic growth, even if bold predictions like Minister Mantashe’s 8% growth from the petroleum sector come to fruition,” Cilliers said.
“The lack of capital project investments and a deteriorating state-owned enterprise (SOE) sector, highlighted by TotalEnergies’ exit from upstream petroleum projects, exacerbate this bleak outlook.”
Comments