Vukuzakhe

The Emerging Contractors Development Programme

Since 1994 the KwaZulu-Natal Department of Transport has allocated its budget to promote social equity and black economic empowerment. Vukuzakhe is an emerging contractor development programme which focuses on wealth and job creation in communities that have been most disadvantaged historically. The programme was piloted in 1994 as part of the Roads for Rural Development Programme which then had a budget of only R3 million. Today more than one thousand contracts are awarded annually to emerging contractors with a value of more than R200 million.

Today more than one thousand five hundred contracts are awarded annually to emerging contractors with a value of more than R400 million.

	Bheki’s Earthworks A Stage 3 Contract: Contractor: Type 7a Construction subgrade and drainage, Muhlungulu Road in Vryheid. Contract value of R570 000.00
Vukuzakhe - promoting and supporting sustainable business development in the emerging contractor sector.

What is the Vukuzakhe Programme?

The Department has an established regulatory framework to support Emerging Contractors. This framework allows for targeted procurement procedures which are in line with affirmative action policy to address the legacy of apartheid and gender discrimination. The Emerging Contractor Programme is a 4 staged advancement programme facilitating the growth and development of small businesses. Each stage of advancement is characterised by higher levels of risk to the contractor and the removal of support mechanisms by the Department. The staged advancement programme is designed to effectively remove barriers that prevent the full participation of emerging contractors in the road construction industry. Contracts are awarded against Departmental estimates to contractors who are on the verified Department's database.

How Does the Vukuzakhe Programme Work?

Data Base
The KwaZulu-Natal Department of Transport has a verified data base of emerging contractors. Admission onto the data base requires applicants to undergo a rigorous interview with Department officials. The interview is designed to establish skills levels, ensure that the business is genuine and that it meets the objectives of the programme. We have put in place systems that will allow the maximum time of four weeks to process information into the database.

Application forms are available here or may be collected from Rooms L-205 / L-206 at our Head Office at 172 Burger Street, Pietermaritzburg (Enterprise Development Directorate) or from any of the Department’s District offices throughout the Province. Alternately, you may request that an application form be posted to you by phoning our Head Office on (033) 355-8780.

Tender Procedures
The KZN Central Procurement Committee has approved our submission to allow the Department to award contracts up to the value of R5 million provided that the Department adheres to the approved regulatory framework. Contracts are only awarded to contractors who are on the KwaZulu-Natal Department of Transport’s data base. Contracts are awarded against set, negotiated or competitive rates.

The 4 Staged Advancement Programme
Stage 1A: maximum value of the contract = R 50 000
Stage 1B: maximum value of the contract = R 200 000
Stage 2: maximum value of the contract = R 500 000
Stage 3: maximum value of the contract = R1 000 000
Stage 4: maximum value of the contract = R5 000 000

The shift in emphasis will allow the KwaZulu-Natal Department of Transport to gear up its training programmes through its relationship with the Vukuzakhe Associations and to facilitate the capitalisation and credit worthiness of the Emerging Contractor sector in KwaZulu-Natal.

In addition, from time to time, special dispensation is motivated for pilot projects which are designed to fast track the normalisation of the road construction industry by growing the Vukuzakhe contractors’ share of the market. Thus, for example, under ARRUP projects, contracts in excess of R 10 million have been awarded to Vukuzakhe contractors. These contracts range from labour contracts to bridge building and full surface road construction.

Support Services
Support services offered within the Vukuzakhe Programme include:

• a relaxation of sureties and performance bonds

• on the job training both in technical and business management skills

• organisational development inputs to form associations

• training of Vukuzakhe Associations to provide services and information to members and to enable them to become an effective lobby and advocacy group in the construction sector

• access Vukuzakhe contractors to CETA learnerships.

Zibuse Road Construction - Stage 1b Contract: Road marking, Main Road 208 in Ladysmith Contract value of R136 000.00	James’ Construction - Stage 4 Contract: Nyalazi River Bridge, Main Road 235 Contract value of R2,696 727.00

The shift in emphasis will allow the KwaZulu-Natal Department of Transport to gear up its training programmes through its relationship with the Vukuzakhe Associations and to facilitate the capitalisation and credit worthiness of the Emerging Contractor sector in KwaZulu-Natal.

Building Partnerships for Development - Working with Vukuzakhe Associations and CETA

Historically we have responded to the needs of the emerging contractor sector through its Staged Advancement Programme on a contract to contract basis. Because of the rapid growth in the number and value of contracts awarded, we will now channel aspects of the programme through Emerging Contractor Associations.

We will provide the necessary technical and capacity building assistance to ensure the emerging contractor associations can assist their members to:

• register as emerging contractors on the department’s data base
• access finance and credit
• access plant
• access suppliers and discounts
• access information and training

In partnership with CETA we have launched the first one hundred CETA Construction Contractor learnerships under our Vukuzakhe programme. Our intention with CETA is not so much to train individual contractors but to provide systematically for the development of their business enterprises by accessing them to other learnership opportunities offered by the training authorities established under Sector Education and Training Authority (SETA) programme which was recently launched by the passing of the Skills Development Act. This will ensure a more holistic approach to the development of Vukuzakhe enterprises and will guarantee their ability to complete and further develop in the market place.

Training, Mentorship and Contract Management Support

Key constraints to entry and performance of emerging contracts are the specialised skills required in the construction industry. The Department is providing contracts with tendering skills to assist them in the building up of their tender rates. This assists them in the understanding of what resources and construction methodologies are required to successfully perform their contractual obligations.

On site mentorship is continuously provided to assist contractors with ordering materials, negotiations with suppliers and production rates. This mentorship has been provided through contract management support or through joint ventures with established contractors.

Business skills’ training has been provided to assist with compliance to all statutory requirements. This support programme has improved the credit rating of contractors. The Department has assisted many contractors to understand and honour their obligations to the Receiver of Revenue.

The implementation of the Construction Contractor Learnerships has commenced in the four regions of the Province. These learnerships are provided through the Construction SETA to assist emerging contractors with acquiring recognised skills to manage their businesses. The Department and CETA will continuously work together to ensure that appropriate skills are developed within the emerging market.

Organisational Development

Most emerging contractor participating in the Vukuzakhe programme are members of the Vukuzakhe Associations. These associations were formed to facilitate communication between the individual contracts and the Department. As the programme developed it became apparent that a single unified forum was required to advance the interests of emerging contractors. The 31 Associations have affiliated themselves with each other to form the Vukuzakhe Provincial Council.

The aims of the Provincial Council are to:

• win recognition that not all SMME’s are alike, and that emerging contractors face unique challenges, e.g. different types of training and financial assistance that they require;

• provide the general public with the assurances needed to business with emerging contractors. They will develop a code of conduct that will oblige all members to fulfil contracts timeously and comply with acceptable standards of workmanship;

• promote the self-sufficiency of members by accumulating resources that lessen their dependence on others. Resources will be accumulated through a portion of the joining fees and monthly subscriptions collected by member associations. In time these funds will allow the Provincial Council to address guarantees for payment of plant and other supplies;
   
• to speak with a single voice about matters that affect them collectively. As a lobby group the Provincial Council will be a powerful force to promote the needs and aspirations of their members

For More Information Contact KZN Department of Transport 172 Burger Street, Pietermaritzburg, 3201 Republic of South Africa Private Bag X9043, Pietermaritzburg, 3200 Tel: (033) 355 8600 Fax: (033) 355 8092 Enterprise Development Directorate Tel: (033) 355 8780/8080

"Central to the lasting eradication of poverty is the creation of a growing business sector that creates sustainable jobs which in turn, increases the productivity of our country. The small business sector must reflect economic empowerment or ordinary citizens and not just the upper echelons of society." - S'bu Ndebele- MEC, KwaZulu-Natal Department of Transport (1994-2004)

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