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By Nellie Peyton
PRETORIA (Reuters) - Powerful and politically-connected "construction mafias" are scaring away investors and holding back infrastructure projects needed to grow South Africa's economy, the country's new public works and infrastructure minister said on Friday.
Dean Macpherson took office last month in South Africa's new coalition government and is now tasked with helping execute President Cyril Ramaphosa's plan to turn the country into a construction site.
Ramaphosa said in his first policy speech to the new parliament that inclusive economic growth would be driven by massive investment in infrastructure. But for that to happen the state will need to tackle the rampant criminal gangs that invade construction sites, Macpherson said in an interview.
"It's a big threat to us," he said. "It actually physically stops projects that are underway (and) it creates a barrier to entry for the private sector because if there's going to be stoppages and cost overruns, that eats into their margins."
"Why would you deploy capital that's going to sit in a project indefinitely, possibly, and that you're then going to have to start paying more and more towards to keep gangsters off of your site?" he said.
"Mafias" in South Africa's construction sector initially surfaced in the east coast province of KwaZulu-Natal about a decade ago and have since expanded across all provinces, according to a 2023 report by the Cape Town-based Inclusive Society Institute.
The groups typically invade construction sites, demanding money or a stake in development projects, and use violence or intimidation to get what they want, it said.
They also have close ties with corrupt politicians, said Macpherson, who is the former provincial chairperson for KwaZulu-Natal for the Democratic Alliance (DA), previously the main opposition party which has now joined the government.
Macpherson said he would meet various state actors next month to come up with a national strategy for tackling the gangs, and that Ramaphosa had identified it as a priority.
"A lot of people have spoken to us, particularly on the institutional funding side, to say it is the single biggest risk for them that they invest in something and these projects just stop for eternity," he said.
His department is looking at new funding models to attract private sector investment, he said, adding Treasury was working on reforms to the public‐private partnership regulations that would help.
(Reporting by Nellie Peyton; Editing by Olivia Kumwenda-Mtambo and Emelia Sithole-Matarise)
