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Date : 08/09/2003
Source: KwaZulu-Natal Provincial Government
Title: Mabuyakhulu: KwaZulu-Natal construction industry conference


ADDRESS BY KWAZULU-NATAL MINISTER OF WORKS, MR MICHAEL MABUYAKHULU, DURING THE CONSTRUCTION INDUSTRY CONFERENCE, Sun Coast Casino, Durban, 8 September 2003

THEME - CONSTRUCTION INDUSTRY DEVELOPMENT, GROWTH & CHALLENGES

Directors of Programmes,
Minister of Public Works, Honourable Stella Sigcau,
Dr M Hadebe, Chairperson of the Portfolio Committee and other member's of parliament present,
Mayors and Deputy Mayors present,
Councillors,
Guest speakers, Messrs Sipho Shabalala, James Maseko, Themba Dlamini, Canon Noyana, Pregan Pillay,
Senior Government Officials,
Distinguished Guests,
Members of the Media,
Ladies & Gentleman.

When I became Minister of Works in this province, in April of this year, I vowed that I would make a contribution in forging a better partnership between various role-players in the construction industry and the government of KwaZulu-Natal. During today and tomorrow you the delegates that have positively responded to my call for us to come together in order to deliberate and reach consensus on the contribution of each role-player in developing, growing and meeting the challenges of the construction industry in our province.

When delivering my speech last year I said we are "spreading our wings across the globe whilst becoming a favourite home for investors".

I also expressed my appreciation of the growing co-operation between the government and our partners in the private sectors, which has become the basis for this province to be taken seriously by potential investors. By that time, I indicated about 12 billion rand had been invested in various strategic projects in the province and - mainly by the private sector. This included the construction of new businesses, upgrading and expansion of existing ones- particularly by our big firms such as BHP Billiton in Richards Bay and Toyota in Durban.

Since then, there has been some exciting economic progress in this province. A number of big companies including Mondi have announced major expansion programmes, such as the 2,5 billion rand expansion of the Richards Bay plant. Other sectors of the construction industry such as the suppliers of cement have also reported a sustainable growth trend, which is indicating that the industry has been generally performing well since 2000.

Although this cannot be said to be the industry wide trend, nonetheless we have made some advances in our trail to achieve a sustainable base upon which we can build on. I must say that we owe these successes to the reigning mood of partnership between the government and the industry that has injected an unprecedented confidence in the province's economy. I am reminded that one scholar once wrote "that success does not come in a moment to successful people. It is the result of continuous steady effort. Once you make that discovery you are less likely to become discouraged when you do not become successful overnight, As George H Mathason said we "conquer - not in any brilliant fashion - but we conquer by continuing'

Certainly we can now use that when the government and the business start to speak in one voice, we can achieve much more than each one of us can do when we act in solos. We want to spread our wings across the length and breadth of our province and become the hive of construction activity, in each and every corner of our cities, towns and villages. Through public and private sector spending in capital infrastructure and in other various types of public works programmes. We want to see more cranes on our skies and attract more greenfield investments, whilst retaining our competitiveness in terms of expansion programmes of existing companies.

However, for us to accomplish our goals of becoming the country's economic hub and the economic gateway to the entire continent of Africa, we have to improve our economic infrastructure. The campaign to have the Dube Trade Port created at La-Mercy as the continent's integrated multimodal logistics platform reflects our acknowledgement that we need modern facilities to be able to compete effectively in the global market. This multibillion rand project will give the construction industry the necessary boost and create job opportunities for thousands of our people.

The improved transportation infrastructure is cardinal to our socio-economic progress. Ladies and gentleman, I have no doubt that if we position ourselves as a serious force to be reckoned with, we will attract the attention of the world community. At the same time, we must acknowledge, that the provision of training is the integral part of infrastructural development that cannot be divorced from skills development for sustainable growth and the creation of job opportunities for our people. The theme of this conference is 'Construction industry growth and challenges -a KwaZulu-Natal perspective. We have divided our main theme into three sub themes.

Sub theme 1 is dealing with infrastructure investment opportunities. I expect all participants in this conference to make a contribution on how we can mobilise resources that can be invested in infrastructure. Our focus is primarily capital and economic infrastructure. We must however be able to balance the social infrastructure needs that government must deal with. We expect this conference to grapple with issues of job creation, poverty alleviation, skills development and raising awareness of the HIV/AIDS epidemic in the construction industry. The growth and development summit that took place on 7 June this year, agreed on the need for the expanded public works programme. We want to hear from you, on how this programme should be embarked upon in our province, and the type of partnerships that are required to make this programme a success.

Sub theme 2 is dealing with Industry Capacity and Readiness. This conference will have failed if it did not deal with the issue of black economic empowerment.

Assessing the readiness of the construction arena in the implementation of various infrastructure investment programmes is a key challenge for the KwaZulu-Natal Department of Works. This requires an open and frank approach by the industry in terms of outlining the key challenges that they may be facing as an industry in KwaZulu-Natal.

Responding to broad social and economic objectives:

The development of the construction industry must respond to the following broad social and economic imperatives:

* Sustainable economic growth and productivity of the sector;
* Rapid and efficient delivery of quality assets to the public;
* Sustainable employment creation;
* Affirmative action;
* The active promotion of small and micro enterprises (SMMEs);
* Stabilised and enabling labour relations within the framework of labour regulations;
* A human resource development strategy, which is holistic,
* sustainable and accessible;
* Competitiveness and the opening up of the South African markets to regional and international business;
* The development of the public sector capacity to manage the delivery process; and
* Government's role in promoting and enabling environment for industry development.

Sub-theme 3: Construction Industry Development in South Africa

The construction industry in South Africa is a very crucial asset. It needs to be looked after and developed if it is to realize its value and contribution to the economy of the country.

This sub-theme will look at the pioneering work being carried out by the National Department of Public Works (through the Construction Industry Development Board), the Department of Labour (through the Construction Education and Training Authority) and the private sector in this regard.

The National Government contributes to the development of an enabling environment for the construction industry by providing a regulatory framework and the development of various construction industry instruments such as the procurement tool kit, register of contractors and register of projects, amongst others.

The role of the Department of Labour in skills development through the Construction Education and Training Authority (CETA) will also feature very strongly in the conference. The issue of training and skills development cuts across the various infrastructure delivery programmes of government. The conference will also benefit from the CETA in terms of the available training and skills transfer opportunities offered to the industry. These will include mentorships, learnerships and the broad skills development funds accessed from the National Skills Fund.

Government and business have been concerned with the low levels of participation and effective exclusion of the majority of black people from the mainstream economy. This exclusion limits the realisation of our economic potential in the expansion of our productive base and augments the legacy of racial and economic inequality. The test of South Africa's competitiveness and prosperity will not only be measured by the degree of our support for industry but also the degree to which we able to redress profound inequality. The provincial economy has not fundamentally deracialised, inequality have reason rather than fallen and there have been only a few empowerment business transactions in the province.

It is not yet evident that government affirmable procurement processes has made a significant difference in the creation of sustainable black owned enterprises. It is also common knowledge that black owned firms in many instances lack the skills and experience in fulfilling their contractual obligations as consequences of low levels of access to finance and technical expertise. In other examples, the poor circulation and understanding of procurement requirements propagate a dependency on external sources. Black firms are therefore vulnerable in joint ventures and subject to manipulation and or exploitation in the government tender process.

As a result the fundamental crisis of the exclusion of black people from financial and economic resources remains and comprehensive/ holistic strategies are required to increase black people access to productive assets, ensure the productivity of those resources, induce new opportunities, increase levels of ownership, management and control of productive assets. These strategies should support individual entrepreneurs as well as social and collective capital. Further more, BEE should be people centred and thought of as part of broader empowerment processes that seek to create jobs, develop urban and rural areas, alleviate poverty, focus on the empowerment of women and youth and improved skills and education.

We are then presenting to this conference a strategic framework for BEE in KZN that aims to deal with the following issues amongst others:

* Facilitate SMME development and joint ventures (networking function) through creating database of all BEE companies on a sector basis, identifying and promoting opportunities and matchmaking
* Monitoring and evaluating BEE strategies and programmes and acting as information based watchdog function in the private and public sectors to assess and measure impact and change within management hierarchies, linkages between big and small businesses and procurement processes amongst others
* Specific projects for vulnerable groups including women and youth. Focus on women/youth in business, skills training and knowledge development
* Access to information in order to breach the digital divide by establishing an accessible province wide information network focused on market related information, and government tenders etc
* Focus in financing and investment into BEE by creating a private/public empowerment fund to look at variety of grant, debt, equity and other forms of financing
* Facilitate appropriate skills and knowledge development through focusing on support for existing and emerging firms. In order to realise the objective mentioned above it is necessary that we establish a BEE centre that will be staffed with professionals and that such a centre should combine a set of financial and non-financial services that could be provided either directly or indirectly. For this task to be successfully carried this conference will need to debate and reach consensus on the critical success factors for the implementation of BEE in KwaZulu-Natal. We want to submit that such critical success sectors should include the establishment of the centre, creation of a funding mechanism (venture capital fund or private equity fund) and measuring and monitoring the impact (effectiveness of the centre).

Although the private sector has a formal structure in the form of the industry development board that brings together all companies in the industry. I however believe, that we need to agree on a provincial forum in which the provincial government, the CIDB and organised labour would meet in order to discuss issues of common interest such a forum would amongst other things discuss the following matters:

* Appropriate skills formation and improved access to information
* Access to finance (debt, equity and grants) and markets
* Improved representation in the management of companies
* High levels of inequality (defined by income and social indicators)
* Socio economic concerns (including HIV Aids and crime amongst others)
* Integration and co-ordination across both public & private sectors
* Measurable and performance based programmes

I expect this conference to reach an understanding on the modus operandi of such a forum, the nature if issues to be dealt with, size and representation, frequency of meetings and who will be responsible for appointing people to such a forum.

I want to urge that all breakaway sessions should discuss this very important matter.

Once again let me take this opportunity to thank each and every participant in this conference that has responded to our call for all of us to come together to discuss issues that should grow our industry in this province. I therefore conclude on this following note, firstly by inviting all of you to attend the Gala Dinner tonight at 7pm in this very same room and finally to say to you that one important fact to remember, is that opportunity always looks bigger going than coming. In other words, it is very easy for many people to see an opportunity that they have missed. It is much more difficult for people to see an opportunity that has not yet come. But the good news is that, there are always opportunities on the horizon, whether you can currently see or not.

We in this province can see ours.

How big we think is determined by the way we think. And the way we think is one of the few things in life that we can control. As someone once said" we cannot direct the wind but we can adjust the sails"

I thank you

Issued by KwaZulu-Natal Provincial Government
8 September 2003

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