transaction will lead to the survival of this business ,” says Mofokeng . The VRP agreement was negotiated between the government , through the auspices of the BBCBE , and the South African Forum of Civil Engineering Contractors in February last year on behalf of seven companies , to address potential and outstanding civil claims following all the companies admitting in settlement agreements with the Competition Commission in 2013 to having engaged in collusion and price fixing . Under the agreements , companies opting for the turnover arrangement would be required to mentor three emerging black-owned contractors to sustain a cumulative annual revenue equal to 25 % of the mentor companies ’ annual revenue from civil engineering and building work delivered within South Africa by 2024 . Aveng , Group 5 , and Basil Read have yet to announce their deals , but have chosen the second option : selling at least 40 % of their equity to a black-owned company . In December , Aveng announced the termination of discussions to sell 51 % of its equity and 45 % of its economic interest to black-owned Kutana Construction when the latter was unable to raise the agreed funding . “ We at least have a clearer picture and can see that the companies are making progress . Of equal interest is the institutional arrangements relating to the R1.5-billion Tirisano Trust fund , part of the work of which will be to monitor and evaluate the implementation of this plan . The next step here is the appointment of trustees by government . Reports will be submitted to the Trust , and only then will we really know how well it is working . “ If this programme does succeed , it will go a long way towards ensuring this industry becomes transformed . I believe we will be able to look back in five years and see that this initiative brought about the transformation of the construction industry ,” says Mofokeng .
BBCBE ’ s vision
To achieve this , BBCBE has a certain vision : the manner in which it wants the entire industry to benefit from the agreement , is for the beneficiary companies involved in the economic alliances to in turn involve black professionals when involved in a greenfields project . “ We [ BBCBE ] have already encouraged these professionals to form joint ventures and be opportunity ready . We also want to see further empowerment through subcontracting opportunities . We especially want to see such opportunities spread to black women and youth . “ In addition , our vision includes these consortia making an absolute priority procurement from blackowned suppliers that have traditionally struggled to gain access to the formal sector . Our vision , therefore , is that VRP must prise open access to the industry for black suppliers . We want to see the benefit spread widely rather than narrowly — beyond just the beneficiaries of economic alliances . We have already made a presentation to government in this regard ,” says Mofokeng . Quite apart from VRP , Mofokeng says the BBCBE is currently lobbying government on a number of other issues . Equity investors in the seven colluding construction firms were most likely to come from outside the industry , because that is where the black investment capital lies , and the BBCBE is adamant that these nonindustry companies make a point of working with current players in the industry who understand the industry better . “ We want to see empowerment spreading down the construction value chain .”
Regulation
“ We ’ re also keen to see the draft Public Procurement Bill being gazetted for public comment , as the current Preferential Procurement Policy Framework Act ( PPPFA ) is definitely not pro black business or empowerment friendly , but in fact rather inhibits the growth of black empowerment in construction . The government needs to take a deliberate strategy to empower historically disadvantaged individuals because currently , blackness does not count for much when tendering against established companies .” This is
Eamonn Ryan
THOUGHT LEADERS
The emerging sector has cause for dissatisfaction with its lot , says Gregory Mofokeng , chief executive of the Black Business Council in the Built Environment ( BBCBE ).
“ Yet , these established businesses enjoy other advantages that are closed to the emerging sector . We hope that will change .” Gregory Mofokeng , BBCBE
because many established companies enjoy a similar B-BBEE scorecard rating to genuinely black-owned businesses , who therefore lose any competitive advantage . “ Yet , these established businesses enjoy other advantages that are closed to the emerging sector . We hope that will change ,” says Mofokeng . The final cause of dissatisfaction by the emerging sector is the late or nonpayment by government for contracts . Mofokeng explains that one of the ‘ progressive proposals ’ by BBCBE is for payment guarantees or pre-payments by government . “ This fell into disrepute during the years of corruption , but we believe that with greater transparency , prepayments are an option .” A system could be devised that ensure prepayments are used for production purposes and not for enrichment by the business owner . To have government or banks come into the project at an earlier stage to empower the contractor would ensure that more work comes the way of the emerging sector ,” concludes Mofokeng . nn
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