Date: 22/11/2004
Source: Ministry of Public Works
Title: Sigcau: Nafcoc Annual General Meeting
SPEECH DELIVERED BY MINISTER OF PUBLIC WORKS, MS. STELLA SIGCAU, MP, AT THE NAFCOC ANNUAL GENERAL MEETING, Sun City
Mr Patrice Motsepe, President of Nafcoc and all business leaders here present
Fellow members of National Cabinet
Premier of the North West Ms Edna Molewa
MECs from the North West government
Rustenburg Mayor Ms. Gertrude Tema
Ambassador Mr Sam Motsuenyane
Ladies and Gentlemen
Thank you very much for the opportunity afforded me to address you on this occasion.
In addressing myself to the issue of empowerment in my department I would like first of all to say that as an integral part of the developmental state, we see our role as critical and influential in the attainment of objectives of transformation and economic development. Thus we have to create an environment that is conducive to the total transformation of the country from apartheid to prosperity.
In pursuance of that role we:
* Contribute to the national goals of job creation and poverty alleviation through the coordination of the Expanded Public Works Programme (EPWP)
* Provide expert advice to all three spheres of Government and parastatals on immovable assets
* Efficiently manage the asset life cycle of immovable assets under the Department's custodianship from acquisition, maintenance to disposal
* Provide strategic leadership to the Construction and Property Industries.
The fact is that national government remains the largest single owner of land in this country, despite the land we have given for settlement claims, for housing and general disposal. This places us in the position of being a major player in the economic and overall transformation.
The question therefore is how as National Department of Public Works we can use these resources to quicken the pace of change and ensure that the change itself is sustainable.
One of the instruments the new South African developmental state is using to address the wrongs of the past is Black Economic Empowerment.
No economy can realise its full potential unless it is able to draw as economic players, the majority of its population.
This means that as we call for transformation at ownership level, we must recognise that unless you also at the same time develop skill in certain industries, we shall not be able to say we have transformed them.
In other words BEE at equity level must be accompanied by a deliberate plan to develop the human resource base of black people. For instance, in my area of competence, the average age of built environment professionals in South Africa is between 50 and 55 years of age. This situation worries me greatly! (Saldanha)
One of the main challenges in the process of transforming the construction industry is to change the ownership of companies from primarily white owned enterprises to a balanced ownership, and which reflects the racial composition of South African society. (Skilling)
That is why when on October 4, 2004, I launched the Construction Industry Charter process, I asked stakeholders to engage with these issues.
My position is that the transformation charters in the property and construction sectors, in addition to short-term measures to change ownership, should in the longer-term address capacity in the industry, both public and private sector.
All this must be done while retaining the world class capabilities of the present construction and property industries and continuously delivering on the infrastructure needs of South Africa and progressively on the needs of Africa.
At another level, to develop this new capacity, the Contractor Incubation Programme targets contractors who show potential to participate in the construction industry as major local or at least substantial regional players.
The aim is to transform the black-owned construction enterprises, which are primarily labour-only subcontractors now, to general and specialist contractors that can participate in both public and private sector construction contracts as main contractors.
The processes of registering prospective participants in the Contractor Incubator Programme have been finalised and the first round of registrations has been conducted. Forty-eight contractors (48) have been selected for registration.
The Department will be implementing the Incubator Programme in the new-year and among the first contracts will be subcontracts for the four large New Generation Prisons: Nigel, Klerksdorp, Leeuwkop and Kimberley.
Each of the New-Generation Prisons has been designed to allow for medium-sized contractors to participate as nominated subcontractors, responsible for the construction of defined sub-projects.
The overall contracts each have 14 such sub-projects. Each of the New-Generation Prisons has been designed to allow for medium-sized contractors to participate as nominated subcontractors, responsible for the construction of defined sub-projects ranging up to R10 million. These projects are collectively worth more than one billion (R1 billion).
(The Contractor Incubator Programme seeks to access as many of these opportunities as possible).
We are pleased to report that over the years, we have awarded more that R200 million worth of contracts to women who have successfully implemented them.
While we hail efforts of these women they face many obstacles, which are universal and afflict women in construction the same way in many parts of the world, including developed countries. The barriers for women advancement have been identified among others as arising from the industry's past male-biased construction education courses, selection criteria, recruitment practices, sexist attitudes, male dominated work environment as well as general lack of women representation in the industry's many formal structures.
In the property sector, one of the major challenges is to drive a transparent and inclusive process that will ensure a win-win outcome is achieved. For this purpose, the Department of Public Works earlier this month launched the Property Charter Transformation process and will also determine the current state of the property sector and is building a knowledge base that will assist the Department in the decision making process on property sector policy.
The issues that we are seeking to address in our cities, towns, housing market, and rural areas are complex and sophisticated. The South African landscape is characterised by displaced urban and rural settlements and our solutions need to match this sophistication.
Government is committed to transforming the property sector to reflect the demographic composition of South Africa on the basis that the property sector would drive transformation and contribute to the creation of a vibrant and growing industry.
When investigating the disposal of a property, government intends to run a constructive process towards empowering black owned enterprises to participate in the ownership of properties in South Africa. This policy intends to support the process of ownership transformation to Black Owned Enterprises.
As Mr Patrice Motsepe told the weekend media, one of the most fundamental stumbling blocks is access to finance for members of Nafcoc and black people in general.
We therefore are engaging the financial institutions to provide finance for the purchase of these properties, but more importantly, we will need the support of the property sector in general to ensure that these properties continue to make a valuable contribution to the economy of South Africa. In the EPWP, our learner contractors are now able to benefit from an agreement we signed with ABSA in terms of which ABSA will extend credit to our people.
Leasing arrangements
Most of you will not know this readily, that a substantial number of the properties which support government’s accommodation requirements are leased from predominantly white owned companies. Our leasing budget alone runs into billions over a three-year budgeting cycle.
To ensure that the transformation objectives are supported, the Department is in the process of reviewing our leasing policy. In the case of procurement, government is willing to pay a 10% premium for empowerment.
You will be pleased to note that we are considering:
A competitive bidding approach to lease agreements as well, and in future, the application of preference for black owned and black empowered companies.
One of our greatest concerns today remains the ongoing abuse of procurement practices by the private sector through fronting. This, we hope the charters will address because apart from being criminal acts, these may serve to further undermine any strides we make in the charter process.
Having said this, we are happy to say that over the past three years we have in our Maintenance programme awarded more and more Affirmable Black Enterprises (ABEs) and Affirmable Professional Service Providers (APSP) contracts.
Based on the past trend, we expect that in the 2005/2006 year we will spend more than R470 million on ABE contractors and more than R61 million on APSP’s. Over the past three years, we have spent 69% of our annual maintenance budget of more than one billion rand (R1 billion) on ABEs and 45% on the professional service providers.
I must say that in order to produce more credible BEE statistics, the Department is in the process of finalising the appointment of a Service Provider for the assessment of our BEE awards.
The phenomenon of jobless growth is an issue in government and we have devised some a few strategies to alleviate poverty and to eradicate unemployment on a sustainable basis. As a collective we have no doubt that we are beginning to make the necessary impact in the lives of the poorest of the poor.
We believe that in order to reach government’s target of halving unemployment by 2014 that is reducing the unemployment rate from thirty per cent to fifteen per cent (30-15%) five hundred and forty six thousand (546,000) new jobs would have to be created each year, in other words, two hundred and seventy six thousand (276,000) more than has hitherto been the case. We have no doubt that we are on course to create 1 million job opportunities in five years. In our latest quarterly report, we believe that at the centre of this phenomenon is the lack of skill. This is the reason why we have placed learnerships - a combination of class learning and practical training at the centre of the Expanded Public Works Programme. The EPWP bridges the gap between unskilled yet abundant labour on one hand and job opportunity on the other.
Our first report indicated that we had created more than 38 000 jobs, the signs are that we are now moving towards the 80 000 mark.
As you know, the allocations set aside for the 2004/5- 2008/9 period are as follows: Infrastructure has been allocated R15 billion, Environmental and culture sector R 4 billion, Social Sector at least R 600 million and Economic Sector, an estimated R400 million.
We agree with Mr. Motsepe when he says that lack of skill is hindering black business. We believe that training will assist us match skill to jobs and will assist in the stimulation of small businesses which are key to job creation.
The EPWP is about dealing with the phenomenon of “jobless growth”, which according to our observation is nothing but the inability of our people to take up opportunities in the job market. The EPWP is just one of many government responses to a challenge and represents government’s responsiveness to our people’s call for a state-led intervention in unemployment and poverty.
Since April 2004 the Department has also been putting in place plans to use its own budget for the maintenance of government buildings for the implementation of the EPWP. The aim is to expand the number of existing provincial programmes such as Gauteng’s Zivuseni and the Western Cape’s Saamstaan programme. Implementation of this programme is due to start in January 2005.
The EPWP is about creating social infrastructure, in other words, alleviation of asset poverty, but it also serves as a catalyst for further economic investment in those communities.
On Friday we shall be addressing a substantial number of business representatives – to see how they can align their social investment budget in a manner that will help with job creation.
In conclusion we are also in the process of revamping our asset management regime with a Draft White Paper which we hope will for the first time introduce proper valuation of all state’s fixed assets.
(Due for submission to cabinet at the end of November, the White Paper on Fixed Asset Management will involve the possible recapitalisation of state assets into the market.
The capital acquired from this exercise will no doubt put money in the hands of government which in turn will contribute significantly to the development of scarce skills in areas like Construction, Property and the stimulation of entrepreneurship amongst our people).
Issued by: Ministry of Public Works
22 November 2004
Source: Ministry of Public Works
Title: Sigcau: Nafcoc Annual General Meeting
SPEECH DELIVERED BY MINISTER OF PUBLIC WORKS, MS. STELLA SIGCAU, MP, AT THE NAFCOC ANNUAL GENERAL MEETING, Sun City
Mr Patrice Motsepe, President of Nafcoc and all business leaders here present
Fellow members of National Cabinet
Premier of the North West Ms Edna Molewa
MECs from the North West government
Rustenburg Mayor Ms. Gertrude Tema
Ambassador Mr Sam Motsuenyane
Ladies and Gentlemen
Thank you very much for the opportunity afforded me to address you on this occasion.
In addressing myself to the issue of empowerment in my department I would like first of all to say that as an integral part of the developmental state, we see our role as critical and influential in the attainment of objectives of transformation and economic development. Thus we have to create an environment that is conducive to the total transformation of the country from apartheid to prosperity.
In pursuance of that role we:
* Contribute to the national goals of job creation and poverty alleviation through the coordination of the Expanded Public Works Programme (EPWP)
* Provide expert advice to all three spheres of Government and parastatals on immovable assets
* Efficiently manage the asset life cycle of immovable assets under the Department's custodianship from acquisition, maintenance to disposal
* Provide strategic leadership to the Construction and Property Industries.
The fact is that national government remains the largest single owner of land in this country, despite the land we have given for settlement claims, for housing and general disposal. This places us in the position of being a major player in the economic and overall transformation.
The question therefore is how as National Department of Public Works we can use these resources to quicken the pace of change and ensure that the change itself is sustainable.
One of the instruments the new South African developmental state is using to address the wrongs of the past is Black Economic Empowerment.
No economy can realise its full potential unless it is able to draw as economic players, the majority of its population.
This means that as we call for transformation at ownership level, we must recognise that unless you also at the same time develop skill in certain industries, we shall not be able to say we have transformed them.
In other words BEE at equity level must be accompanied by a deliberate plan to develop the human resource base of black people. For instance, in my area of competence, the average age of built environment professionals in South Africa is between 50 and 55 years of age. This situation worries me greatly! (Saldanha)
One of the main challenges in the process of transforming the construction industry is to change the ownership of companies from primarily white owned enterprises to a balanced ownership, and which reflects the racial composition of South African society. (Skilling)
That is why when on October 4, 2004, I launched the Construction Industry Charter process, I asked stakeholders to engage with these issues.
My position is that the transformation charters in the property and construction sectors, in addition to short-term measures to change ownership, should in the longer-term address capacity in the industry, both public and private sector.
All this must be done while retaining the world class capabilities of the present construction and property industries and continuously delivering on the infrastructure needs of South Africa and progressively on the needs of Africa.
At another level, to develop this new capacity, the Contractor Incubation Programme targets contractors who show potential to participate in the construction industry as major local or at least substantial regional players.
The aim is to transform the black-owned construction enterprises, which are primarily labour-only subcontractors now, to general and specialist contractors that can participate in both public and private sector construction contracts as main contractors.
The processes of registering prospective participants in the Contractor Incubator Programme have been finalised and the first round of registrations has been conducted. Forty-eight contractors (48) have been selected for registration.
The Department will be implementing the Incubator Programme in the new-year and among the first contracts will be subcontracts for the four large New Generation Prisons: Nigel, Klerksdorp, Leeuwkop and Kimberley.
Each of the New-Generation Prisons has been designed to allow for medium-sized contractors to participate as nominated subcontractors, responsible for the construction of defined sub-projects.
The overall contracts each have 14 such sub-projects. Each of the New-Generation Prisons has been designed to allow for medium-sized contractors to participate as nominated subcontractors, responsible for the construction of defined sub-projects ranging up to R10 million. These projects are collectively worth more than one billion (R1 billion).
(The Contractor Incubator Programme seeks to access as many of these opportunities as possible).
We are pleased to report that over the years, we have awarded more that R200 million worth of contracts to women who have successfully implemented them.
While we hail efforts of these women they face many obstacles, which are universal and afflict women in construction the same way in many parts of the world, including developed countries. The barriers for women advancement have been identified among others as arising from the industry's past male-biased construction education courses, selection criteria, recruitment practices, sexist attitudes, male dominated work environment as well as general lack of women representation in the industry's many formal structures.
In the property sector, one of the major challenges is to drive a transparent and inclusive process that will ensure a win-win outcome is achieved. For this purpose, the Department of Public Works earlier this month launched the Property Charter Transformation process and will also determine the current state of the property sector and is building a knowledge base that will assist the Department in the decision making process on property sector policy.
The issues that we are seeking to address in our cities, towns, housing market, and rural areas are complex and sophisticated. The South African landscape is characterised by displaced urban and rural settlements and our solutions need to match this sophistication.
Government is committed to transforming the property sector to reflect the demographic composition of South Africa on the basis that the property sector would drive transformation and contribute to the creation of a vibrant and growing industry.
When investigating the disposal of a property, government intends to run a constructive process towards empowering black owned enterprises to participate in the ownership of properties in South Africa. This policy intends to support the process of ownership transformation to Black Owned Enterprises.
As Mr Patrice Motsepe told the weekend media, one of the most fundamental stumbling blocks is access to finance for members of Nafcoc and black people in general.
We therefore are engaging the financial institutions to provide finance for the purchase of these properties, but more importantly, we will need the support of the property sector in general to ensure that these properties continue to make a valuable contribution to the economy of South Africa. In the EPWP, our learner contractors are now able to benefit from an agreement we signed with ABSA in terms of which ABSA will extend credit to our people.
Leasing arrangements
Most of you will not know this readily, that a substantial number of the properties which support government’s accommodation requirements are leased from predominantly white owned companies. Our leasing budget alone runs into billions over a three-year budgeting cycle.
To ensure that the transformation objectives are supported, the Department is in the process of reviewing our leasing policy. In the case of procurement, government is willing to pay a 10% premium for empowerment.
You will be pleased to note that we are considering:
A competitive bidding approach to lease agreements as well, and in future, the application of preference for black owned and black empowered companies.
One of our greatest concerns today remains the ongoing abuse of procurement practices by the private sector through fronting. This, we hope the charters will address because apart from being criminal acts, these may serve to further undermine any strides we make in the charter process.
Having said this, we are happy to say that over the past three years we have in our Maintenance programme awarded more and more Affirmable Black Enterprises (ABEs) and Affirmable Professional Service Providers (APSP) contracts.
Based on the past trend, we expect that in the 2005/2006 year we will spend more than R470 million on ABE contractors and more than R61 million on APSP’s. Over the past three years, we have spent 69% of our annual maintenance budget of more than one billion rand (R1 billion) on ABEs and 45% on the professional service providers.
I must say that in order to produce more credible BEE statistics, the Department is in the process of finalising the appointment of a Service Provider for the assessment of our BEE awards.
The phenomenon of jobless growth is an issue in government and we have devised some a few strategies to alleviate poverty and to eradicate unemployment on a sustainable basis. As a collective we have no doubt that we are beginning to make the necessary impact in the lives of the poorest of the poor.
We believe that in order to reach government’s target of halving unemployment by 2014 that is reducing the unemployment rate from thirty per cent to fifteen per cent (30-15%) five hundred and forty six thousand (546,000) new jobs would have to be created each year, in other words, two hundred and seventy six thousand (276,000) more than has hitherto been the case. We have no doubt that we are on course to create 1 million job opportunities in five years. In our latest quarterly report, we believe that at the centre of this phenomenon is the lack of skill. This is the reason why we have placed learnerships - a combination of class learning and practical training at the centre of the Expanded Public Works Programme. The EPWP bridges the gap between unskilled yet abundant labour on one hand and job opportunity on the other.
Our first report indicated that we had created more than 38 000 jobs, the signs are that we are now moving towards the 80 000 mark.
As you know, the allocations set aside for the 2004/5- 2008/9 period are as follows: Infrastructure has been allocated R15 billion, Environmental and culture sector R 4 billion, Social Sector at least R 600 million and Economic Sector, an estimated R400 million.
We agree with Mr. Motsepe when he says that lack of skill is hindering black business. We believe that training will assist us match skill to jobs and will assist in the stimulation of small businesses which are key to job creation.
The EPWP is about dealing with the phenomenon of “jobless growth”, which according to our observation is nothing but the inability of our people to take up opportunities in the job market. The EPWP is just one of many government responses to a challenge and represents government’s responsiveness to our people’s call for a state-led intervention in unemployment and poverty.
Since April 2004 the Department has also been putting in place plans to use its own budget for the maintenance of government buildings for the implementation of the EPWP. The aim is to expand the number of existing provincial programmes such as Gauteng’s Zivuseni and the Western Cape’s Saamstaan programme. Implementation of this programme is due to start in January 2005.
The EPWP is about creating social infrastructure, in other words, alleviation of asset poverty, but it also serves as a catalyst for further economic investment in those communities.
On Friday we shall be addressing a substantial number of business representatives – to see how they can align their social investment budget in a manner that will help with job creation.
In conclusion we are also in the process of revamping our asset management regime with a Draft White Paper which we hope will for the first time introduce proper valuation of all state’s fixed assets.
(Due for submission to cabinet at the end of November, the White Paper on Fixed Asset Management will involve the possible recapitalisation of state assets into the market.
The capital acquired from this exercise will no doubt put money in the hands of government which in turn will contribute significantly to the development of scarce skills in areas like Construction, Property and the stimulation of entrepreneurship amongst our people).
Issued by: Ministry of Public Works
22 November 2004
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