NEWS: How to deal with the "construction mafia"?

Transformation has moved away from the boardroom to the main gates of big business. Construction companies, property developers and big industries all over SA are coming to terms with the communities and entrepreneurs in rural and peri-urban areas who threaten closure of plants and new projects while demanding to be part of their supply chains. says Shawn Theunissen

What is the mutual benefical solution to avoid construction site closures by communities?

How to deal with the ‘construction mafia’

Forced shutdowns of property developments by popular protests have reached across South Africa, pushing the transformation agenda in the most robust way possible. Labelled the “construction mafia” in the building industry, the motives of those forcing transformation vary from a politically motivated shakedown to genuine, hard-working entrepreneurs looking to be part of a supply chain from which they have traditionally been excluded.

One thing is clear, the people at the gate do not care for the rhetoric of B-BBEE scorecards, industry charters or CSI programmes. There is little concern about whether you have a disabled person on your executive or black ownership if it is not generated from within the ranks of the impacted community itself. Local communities want not only employment, but also to do business with those that own the industrial plants, construction projects and shopping malls in their community.

Communities need to be engaged as partners.

There is no doubt that the transformation of rural and peri-urban communities to attain sustainable development requires both public and private infrastructure support. These communities are stricken by their remote locations and high poverty that forces their most economically active inhabitants to the urban centres. For South Africa to grow an inclusive economy, the rural and peri-urban areas must be a priority on the development agenda.

The government’s Local Economic Development (LED) programme, which is intended to maximise the economic potential of municipal localities, has not generated significant progress, amid an atmosphere of political impotence, mismanagement and corruption. At the same time, the private sector has also haphazardly attempted to bring about the requisite change when setting up shop in these regions.

Over several years of operating in local communities, we have noted several issues that need addressing. First, investors don’t know how to deal with local communities on the development sites they manage, and typically have a reactive approach.

Instead of engagement, companies push law enforcement with lawyers and security companies at the forefront of defending their development sites. Instead of concentrating on mutually beneficial relations, they outsource dealing with community issues and make the problem “go away”. They perceive that the contractors are disadvantaged by dealing with local community challenges as this delays project timelines.

Yet, the people at the gate are changing the nature of transformation by putting localisation on the agenda and one would be remiss to ignore it. Their common pain point is, “Why do you bring in people from elsewhere, when you have people here who can do the work?” If the answer was, “These are highly skilled individuals that could not be sourced locally”, it would be understandable. It is when low-skilled workers are imported and effort is not made to source local suppliers that it becomes particularly vexing on these communities.

Many of the big mining houses and other big industries have long been adept at engaging their host communities. They have employed street-smart individuals who understand the complexity of the communities they operate in. Most mine managers are more akin to mayors than leaders in a business.

These managers fully understand their role in the communities in which they operate, and not being an active leader in their community is bad for the business. Moreover, their understanding of South Africa’s triple threat of unemployment, poverty and the wealth gap, and the impact it has on power relations, is particularly insightful.

Another issue is that the people who stand at the gate might not be united in motive. There are those looking to be power brokers between the business and the community, and looking to undermine the organised representatives. Then there are those who are just blatant thugs, using transformation as a convenient tool. These power balances are constantly shifting within these communities.

Holistic community partnerships instead of mere appeasement

So, what is the option for businesses when people close your gate? Our experience is that not all incidents and circumstances are the same, but a holistic approach that aims for sustainability of business is vital.

It is important that we engage only through organised, properly constituted structures such as registered entities and business organisations. It must be clear that safety and quality are areas that cannot be compromised. Community-based businesses must go through a business development support approach to get them up to the required standards, so they do not fall short of what customers expect or compromise their projects.

The engagement should seek to develop well-run, competent businesses that have all the certification and standards required by suppliers to big business. What is the use if disgruntled community members go back to standing outside the gate when the project is done, because their businesses have not fundamentally changed to become sustainable? This process of bringing marginalised entrepreneurs into the mainstream economy is messy and repetitive, but it must be done. The consequences of not taking transformation seriously weigh on everyone.

Ideally, we need enterprise development programmes and incubators that change these businesses in such a fundamental way that community leaders will have no need to close the gates of big business so that small businesses can stand a chance.

Developed correctly, they will see the need for standards and regulations as tools to build their businesses. By approaching it in this manner, B-BBEE scorecards and industry charters will start to matter when it matters to the people it is meant to benefit.

The people at the gate need to be inside the plant, if we are all going to succeed. Businesses that see them as an inconvenient truth or pest to be placated are the real problem, not those looking to provide for their families. They want to be a part of capitalism, but a form of capitalism that works for everyone.

This opinion piece was written for the Daily Maverick by Shawn Theunissen  an executive at Growthpoint Properties responsible for corporate social responsibility, transformation.