South African business is caught in the clutches of an underworld corporation, ruled by mafia-style syndicates that levy a shadow tax through extortion. These organised crime networks dominate sectors from construction to spaza shops, forcing victims to pay for protection or hand over ownership of projects under threats of violence, vandalism or even death.
The 2023 global organised crime index ranked South Africa seventh worst out of 193 countries on criminality, a steep slide from 19th two years ago, just behind countries such as Myanmar, Mexico and Colombia; even war-torn nations like Afghanistan and Syria are scoring better than South Africa. In Africa, South Africa is third, and first in Southern Africa. Worsening criminality and resilience scores reflect faltering resistance from nonstate actors, weaker national policies and eroding economic regulation. This isn’t just crime — it’s a shadow regime, where syndicate bosses siphon wealth and choke the economy.
The economic toll is staggering. The World Bank estimates that crime costs South African businesses 6.5% of GDP annually, with one in eight formal businesses losing 11% of sales despite 60% investing in security, which alone costs 2.9% of GDP. The Organised Crime & Corruption Reporting Project reported in 2022 that the construction sector — which contributes 3% to South Africa’s GDP and employs 1.3-million people — had lost R68bn to mafia disruptions since 2019, with the result that infrastructure projects were stalled and jobs lost. Construction has huge potential to drive growth; the National Treasury’s 2024 medium-term budget policy statement notes that every R1m invested in this sector creates more than three jobs — the highest multiplier across sectors. But the construction mafias’ extortion stifles this economic engine. Rising costs fuel inflation, reduce sales, deter foreign investment and smother economic progress, leaving low-skilled workers jobless.
The syndicates use tailored tactics to dominate their territories. Construction mafias, masquerading as “local business forums”, storm sites, demanding protection fees or stakes in projects. Taxi operators face per-load levies. In municipalities syndicates rig tenders. Mining companies are coerced into surrendering shares in contracts and misapplying preferential procurement rules. Spaza shops are forced to pay protection fees despite slim margins. Vulnerable groups — people with disabilities, elderly people and informal farmers — are also targeted, creating a climate of fear. GroundUp reported in 2024 that illegal water tanker networks in eThekwini charge residents R500 for 5,000l fills, despite the municipality’s free 6,000l provision. This is exploitation of basic needs, enabled by sabotaged infrastructure, thriving where governance falters.
The 2023 global organised crime index ranked South Africa seventh worst out of 193 countries on criminality, a steep slide from 19th two years ago
Public morale is crushed under the reign of the syndicates. The Ichikowitz Family Foundation’s 2024 African Youth Survey shows that only 16% of young South Africans are hopeful about the future, compared with 91% young Rwandans and 42% young Namibians. The poll shows that 94% of citizens fear corruption (a close ally of extortion), the third highest percentage after Cameroon and Kenya, with most believing the government is failing. The World Economic Forum’s 2017 Executive Opinion Survey listed corruption and crime as the top business obstacles.
The government’s counteroffensive, while earnest, is faltering. Since the 2020 state of the nation address, the South African Police Service (SAPS) has deployed 20 economic infrastructure task teams across 18 districts, targeting extortion hotspots. Six workstreams with the National Prosecuting Authority aim to boost intelligence and prosecutions. Yet only 178 convictions emerged from 6,056 reported cases between 2019 and 2024. Low risks and weak enforcement embolden perpetrators. The Public Procurement Act promises transparency, but a stretched police force of fewer than 180,000, with just 7,800 people in crime intelligence, is struggling to reclaim territory.
Several strategies can be employed to disrupt these organised crime networks. The DA has called for organised crime to be declared a national priority, arming the Hawks to strike at crime bosses. Civil society has demanded that tanker tenders be audited, and that corrupt officials be charged directly, rather than a fine being issued against municipalities. Harsher penalties, effective witness protection, lifestyle audits for police, procurement investigations, well-resourced detectives and accountable officials could disrupt networks. Extortion hotlines, awareness campaigns and data-driven early-warning systems remain underused. Leadership reform within the SAPS and independent oversight are vital to restore trust.
Nigeria and Kenya offer blueprints. Nigeria’s Black Axe syndicate was dismantled via Interpol’s Operation Jackal 3, with 300 arrests and $3m seized, thanks to global co-operation and the use of technology. Kenya’s Prevention of Organised Crimes Act imposes stiff penalties, while trophy bans curb poaching rackets. South Africa could adopt similar legislative reforms and partnerships to target the mafia kingpins, not just the foot soldiers.
Without urgent action, the criminal syndicates’ stranglehold will crush investment and shatter confidence. Service delivery will deteriorate further, leaving communities increasingly vulnerable. Jobs will vanish, inflation will climb and growth will stagnate. But South Africa can fight back. With vigilance, strong law enforcement, cutting-edge technology and global allies, South Africa can dismantle these networks. Prosecuting syndicate masterminds will rebuild trust. Hesitation risks surrendering our nation to a parallel governance system, but a united stand will reclaim our economic prosperity.
Packirisamy is chief economist at Momentum Investments
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