Gangster are demanding protection money from residents and small businesses including crèches in Khayelitsha, Philippi and Nyanga.
Crèche owners and landlords say they are told to hand over half of their profits to the skollies or face being shot and robbed.
People renting flats and car owners are given a similar threat: “R1500 a month will keep you from being hijacked”.
Residents say criminals used to target foreign shop owners but now gangs are threatening them as well.
A community leader, who was only willing to speak on condition of anonymity, says they fear for their lives as they don’t know when the skollies will strike next.
“Ask every business owner here, even the guys selling toilet paper on the streets, everyone is asked to pay,” says the leader.
“The syndicate is big, it would take a specialised task team to crack it.”
Police say they are aware of the extortion but say no cases have been made yet, thus making it difficult to tackle the root of the problem.
A crèche owner in Khayelitsha says she was approached by youngsters recently.
She says: “They said I should pay R1500 a month or they will shoot me. I have been hearing stories and I am scared.”
A landlord said the gangs demanded half of his profits and threatened him with violence.
“They said they can get me tenants if the ones I have leave. I am thinking of either selling the house and leaving the area, or asking my tenants to deposit the rent money straight into my bank account,” he says.
“I cannot give another man my sweat and blood because he has a gun and is not afraid to use it.”
Police spokesperson Brigadier Novela Potelwa says they are aware of a protection money racket.
“The cases have allegedly occurred across a number of station precincts, with no cases opened with the police.
“It is a worrying pattern for SAPS as it seems to be linked to other serious violent crimes.
“As a result, a plan is currently being developed in a bid to tackle the incidents.
“The starting point is to get specific information about the incidents.”
Residents said they fear retaliation from criminals should they report the cases, but Potelwa says police are busy developing a reporting mechanism that will protect the identities of whistle-blowers.
Last month, Police Minister Bheki Cele set up a steering committee to investigate a protection racket operating in the Cape Town CBD, after several businesses complained of being extorted.