Explore the evolving landscape of crime in South Africa, focusing on the Zama Zama illegal mining syndicate and the critical role of the private sector in combating these challenges. Photo: Hawks.
The latest news regarding the Zama Zama has captured the attention of people around the globe. According to Wikipedia “Zama Zamas are illegal artisanal miners in South Africa who occupy closed or operational mines to mine for minerals such as gold, iron ore, coal, and manganese. The term zama zama loosely translates to "take a chance" in isiZulu and they use rudimentary tools and explosives for mining.” A similar phrase to the untrained ear may be the phrase) The Lottery operator encouraged people to) “Tata ma chance, tata ma millions” (Take a chance, take millions)
“Countries around the globe have been forced to reckon with a new reality: a reality where organised crime has shown no sign of slowing down. Instead, criminal groups have quickly adapted and seized fresh opportunities” says Mark Shaw, director of the Global Initiative against Transnational Organised Crime. The latest rumours are that the Zama Zama crime syndicate may be redirecting their illegal activities to the grain market in South Africa.
Crime is a cost to society. The extent of what it costs South Africans to protect their possessions (already paid for or contracted to pay off) is measurable. The short-term industry reported gross written premiums (GWP) of R140.1 billion in 2022. This is an exceptionally large amount to fork out over and above the purchase of the possessions and it is repeated year after year.
1. Extreme measures require tailor-made solutions.
Sasria SOC Ltd is the only non-life insurer that provides special risk cover to all individuals and businesses that own assets in South Africa, as well as government entities. This is a unique cover against risks such as civil commotion, public disorder, strikes, riots, and terrorism, making South Africa one of the few countries in the world that provide this insurance, particularly at affordable premiums. By enabling businesses to restore their liquidity or operations quickly and efficiently after experiencing loss or damage due to special risk events, Sasria SOC Ltd plays a significant role in preventing job losses, maintaining livelihoods, restoring pride and dignity, and facilitating economic stability.
The Global Initiative against transnational organised crime has stated: “Dubbed the ‘construction mafia’ in the media, these people have organised themselves into groups known as ‘local business forums and invaded construction sites across the country, demanding money, or a stake in development projects in what can arguably be described as systemic extortion. These activities have been fuelled by the weak response from the state, allowing them to expand their activities. In 2019, at least 183 infrastructure and construction projects worth more than R63 billion had been affected by these disruptions across the country. Since then, invasions have continued at construction sites across South Africa.”
2. Global Initiatives against crime.
A flagship project of the Global Initiative Against Transnational Organized Crime is the compilation of the Global Organised Crime Index. The Index's key findings show that the gap between criminality and resilience is growing. Today, 83% of the world's population lives in countries with high crime — a sobering increase from 79% in 2021. By contrast, a comparison of resilience over the past two years reveals that the global average has remained stable, with a score of 4.81 out of ten. In particular, the role of non-state actors as resilience agents has declined the most. These actors, including the media, are vital in holding state institutions to account and serve as integral components in communities affected by organised crime. Financial crimes were the most pervasive illicit economy globally in 2022, ranking among the top three criminal markets in every continent. Human trafficking, cannabis, and arms trafficking were the next most prominent criminal markets.
The Index shows how major political shifts and economic hardship have fed directly into organised crime dynamics around the world as criminal groups take advantage of instability, vulnerability, and commodity shortages. State involvement in criminality remains the most pervasive force in driving organised crime. Criminal actors are also taking advantage of the disruption presented by conflict.
3. Consequences of crime and State Capture.
The National Prosecuting Authority (NPA) announced that it has successfully concluded dispute resolution with McKinsey South Africa, in which McKinsey will pay about R1.1 billion into South Africa's Criminal Assets Recovery Account, owing to the social and economic harm caused by one of its former employees. Very noteworthy is the statement that McKinsey will also have to assist the Investigating Directorate in its criminal investigations by continuing to hand over any relevant information and materials in its possession. “In terms of the Resolution, McKinsey admits, accepts, and acknowledges responsibility under South African law for the criminal actions and conduct of Vikas Sagar, who was a former partner of McKinsey, during the relevant period. As a result of Sagar's corrupt actions, McKinsey was awarded contracts with Transnet and Eskom amounting to nearly R2 billion,” explained NPA spokesperson Mthunzi Mhaga. One can expect more fireworks once this criminal prosecution gets underway. The process is likely to unfold much as the VBS scandal after Tshifhiwa Matodzi submitted his affidavit implicating other high-profile individuals such as Julius Malema and Floyd Shivambu and others such as Paul Magula ("Magula") as a non-executive board member of VBS representing the PIC and he was the chairperson of the Credit and Risk committee of VBS board. The wheels turn slowly but they turn.
4. Insuring against damages relating to crime.
South African insurers invented cell insurance and have grown it into the massive industry that it is today. There was significant growth in this sector with the three biggest cell insurers paying over R1 billion in dividends in 2022. Whilst the industry did not invent wearables and the Internet of Things (IoT), many South African insurers are mastering the interaction between them and their insurance solutions for risk prevention. One of the key developing themes identified as a growing trend by our international insurance practice is risk prevention. With IoT technology, insurers are rapidly moving into the area of risk prevention in the non-life and life spaces, providing timely advice and alerts to prevent claims or incentivising policyholders’ behaviour.
The record books will show that 2022 will stand out for the non-life insurance industry for years to come. The industry results included the development of losses associated with the July 2021 Kwa-Zulu Natal and Gauteng riots, which were so big, that it made it difficult to comprehend the impact of a second loss event, one of the most significant natural catastrophe losses in South Africa has ever experienced – the April 2022 Kwa-Zulu Natal floods. The losses experienced by Sasria SOC Limited (Sasria), because of the unrest that took place in July 2021 in KwaZulu-Natal and Gauteng, were unprecedented. It brought thousands of business owners to their knees while threatening the viability of Sasria.
5. The involvement by the private sector where government actions and infrastructure fall short.
The Paramount Group has an unrivalled record as a major peacekeeping partner for governments around the world. Paramount Group has established an impeccable legacy of saving lives, protecting assets, reducing costs, transferring technology, developing skills, and contributing to stability, peace, and economic growth. Paramount Group has a major stake in South Africa’s largest aeronautical engineering business, Aerosud. With customers including Airbus and Boeing, Aerosud has established itself as a critical partner for the global aerospace industry. Aerosud is a risk-sharing partner in the A400M, the new military transport aircraft developed by Airbus. The Pakistan Navy will in 2026 receive the first Embraer Lineage 1000 aircraft modified by Leonardo and Paramount Aerospace Systems for the maritime patrol role. “The aircraft is presently being modified in South Africa and is expected to be delivered in 2026, with subsequent deliveries planned over the coming years as part of a phased approach to modernise our naval aviation. Apart from Paramount, other South African companies participate in the Sea Sultan project. Aerospace engineering and manufacturing company Aerosud has been contracted to supply two sets of interiors.
Paramount Industrial Holdings (PIH), part of the Paramount group of companies, has entered into business rescue amid legal disputes in another Paramount business division. The financial stress is due to a dispute between the parent company in the United Arab Emirates – Paramount Group Limited ADGM (Abu Dhabi Global Market) – and unmanned vehicle manufacturer Abu Dhabi Autonomous Systems Investments (ADASI). In August, Paramount ADGM filed for Chapter 11 bankruptcy protection in Delaware, United States, over the dispute. Other subsidiary companies in South Africa are expected to continue operating as usual. The CIPC lists Paramount Industrial Holdings as being in Business Rescue, whereas other South African Paramount companies are listed as being In Business, and these include Paramount Aeronautical Solutions; Paramount Aerospace Holdings; Paramount Aerospace Industries; Paramount Aerospace Innovations; Paramount Aerospace Systems; and Paramount International.
South Africa is a country with majestic world-class companies that can hold their own on the world platform. It is great to know that we have companies that remain at the forefront of the search for excellence.
* Kruger is an independent analyst.
** The views expressed herein are not necessarily those of Personal Finance or Independent Newspapers.
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