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ADDRESS BY KWAZULU-NATAL MEC OF TRANSPORT, MR S'BU NDEBELE, AT THE EMERGING CONTRACTOR SUMMIT23 January 2001, Durban
Master of Ceremonies Let me make no bones about it. Today is a proud day for my Department and the stakeholders working with us. What makes us proud is that today's Summit for Emerging Contractors heralds a new chapter in Black Economic Empowerment in KwaZulu-Natal. What makes this Black Economic Empowerment so special to me is that it is all about the empowerment of small business people. It is not a programme for the elite. It is a programme for the mothers and fathers of our province who are struggling to make a decent living and to improve the quality of their lives and to uplift their communities. The KwaZulu-Natal Department of Transport has adopted an approach that places road construction and road maintenance at the centre of a broader strategy for alleviating poverty and for redressing those imbalances of the past that continue to bedevil our province and our country. The programmes that we have introduced create a spectrum of opportunities ranging from Zibambele contracts to support the most destitute families through to Stage 4 contracts for Emerging Contractors which have a value of R1,5 million. In my 2000/2001 Department of Transport Budget Speech to Parliament, I promised that we would allocate R150 million worth of road construction and maintenance work to the Emerging Contractor sector. This financial year, we have awarded more than 900 contracts valued at more than R160 million to Emerging Contractors. This is something to be proud of. The growth of our Emerging Contractor programme is quite staggering. In 1994, our Roads for Rural Development Programme had a budget of only R3 million. As you know, the Emerging Contractor programme grew out of the Roads for Rural Development programme. To go from R0 to R160 million in only 6 years surely makes the KwaZulu-Natal Department of Transport Emerging Contractor programme perhaps the most successful Emerging Contractor programme in the country! And I can assure you that our budget allocations to the Emerging Contractor sector will increase on an annual basis. So much so, that I anticipate that over the next four years the Department will allocate some R1 billion of road construction and maintenance work to the Emerging Contractor sector in KwaZulu-Natal. R1 billion over the next four years! That is a lot of money. I would like to say upfront that in the six years as MEC of Transport in KZN, I have committed myself to:
However, my responsibility as Minister of Transport for KwaZulu-Natal does not end with creating new work and business opportunities for Emerging Contractors. I also have a responsibility to remove those barriers that still restrict the growth, the development and the transformation of the construction industry in KwaZulu-Natal. We realise very well that Emerging Contractors continue to experience difficulties in accessing finance and in hiring plants. We have worked hard and thought hard to come up with workable solutions that would address the finance and plant needs of Emerging Contractors. We intend to gear up the Emerging Contractor programme and ensure that our road construction industry in KwaZulu-Natal is fully representative of all races and both genders. Let me repeat, "We intend to gear up the Emerging Contractor programme and ensure that our road construction industry in KwaZulu-Natal is fully representative of all races and both genders". Our regulatory framework to promote and support Emerging Contractors continues to be supported by our provincial Tender Board. Our regulatory framework allows for targeted procurement procedures which are in line with affirmative action policy to address the legacy of apartheid and gender discrimination. This is why the KwaZulu-Natal Department of Transport sets aside a portion of its annual budget for contracts dedicated to the Emerging Contractor sector. The "financial aid" programme that will be proposed today will pilot an individual contractor financial aid scheme as well as establish pools of plant that can be hire-purchased by Emerging Contractors through their associations. The KwaZulu-Natal Department of Transport intends, with Bell Equipment and Bell Finance, to establish "plant parks" in all our regions. Bell Equipment will supply the necessary plant to each "plant park" which will be financed through Bell Finance. The KwaZulu-Natal Department of Transport will underwrite the plant by guaranteeing adequate work levels for each item of plant. The construction equipment that will make up a "plant park" will therefore be reflective of the construction and maintenance needs of the Department in each region and our analysis of plant needs on a region-by-region basis. Bell Equipment have committed a manager to ensure that plant is hired in an orderly way, that appropriate records are kept and that plant is maintained. In essence, this means that Emerging Contractors will be able to access well maintained plant through our "plant parks" at a reasonable charge. You will also receive appropriate assistance to manage and operate the various items of plant most cost efficiently to ensure higher profit margins for your enterprises. Emerging Contractors will be able to hire plant from our "plant parks" through their associations. Our intention is to eventually transfer ownership of the "plant parks" to Emerging Contractor associations. We therefore have an obligation to establish an appropriate regulatory framework for Emerging Contractors in all thirty Rural Road Transport Forum regions. It is not our intention to impose a regulatory framework on you. It is our intention to develop an appropriate framework with you and Mr James Mlawu, Director of the KZNDOT Development Directorate will outline an action plan for ongoing consultation. We realise, of course, that this does mean that we will have to re-open our database of which we are presently doing, as there are many Emerging Contractors who have not yet registered with us. Again, Mr Mlawu will outline our plan of action in this regard. I must say that we had to close the entry into our database because of the contamination by fronting companies. That process is now over and that is the reason for re-opening it. Our support to your Emerging Contractor associations will not stop at addressing your plant and finance needs. We intend to systematically develop training programmes that will meet your needs and be facilitated through your associations. Training will include:
We anticipate that the eventual collective ownership of "plant parks" and appropriate training through associations will provide Emerging Contractors with the capacity to gear up their operations and to successfully tender for larger contracts. The collective ownership of "plant parks" will improve credit worthiness within the Emerging Contractor sector and at the same time institute appropriate business organisations to begin levelling the playing fields in the road construction and maintenance industry. In addition to piloting "plant parks", the KwaZulu-Natal Department of Transport will also pilot a programme to support individual contractors to access finance and plant. In our initial pilot of our "contractor ownership finance scheme" we will restrict the scheme to ten contractors. The Department will award these ten contractors multi year contracts which will, in turn, act as their guarantee to Bell Finance to secure loans for appropriate plant which they will own as individual businesses. While the selection of only ten contractors, for this scheme may seem small I must emphasise that it is a pilot scheme. Pilot schemes are used to experiment and to iron out difficulties in the system. Both the Department and Bell Finance will use the pilot scheme as a learning process to fast track financial aid packages to other Emerging Contractors. Mr Mlawu and his team will outline how our "contractor ownership finance scheme" will be introduced as part of their action plan. The KwaZulu-Natal Department of Transport is quite clear in its mission to transform the road construction industry in KwaZulu-Natal. This cannot be achieved without budgets and programmes that are dedicated to Black economic empowerment. There is nothing undemocratic or unconstitutional about this. Nor is the programme in any way anti any race group. I believe that our Emerging Contractor programme has the potential to put the rural economy in KwaZulu-Natal on a labour absorptive growth path by creating business and job opportunities within resource poor communities. Roads are built where people live and therefore can be designed to create opportunities for local people. It is for this reason that our Emerging Contractor programme is linked to our Roads for Rural Development initiative. Already our records show that the Emerging Contractor programme has created hundreds of sustainable jobs and thousands of temporary jobs. This is a very commendable performance because job creation has occurred during a period when the formal sector has been shedding jobs at an alarming rate. In my role as a political leader, I have always championed the cause of democracy in South Africa. It is for this very reason that I, together with thousands of other democrats, spent much of my youth locked away on Robben Island. Our jailer then was, of course, the undemocratic National Party government and, in a sense, all those South African citizens who voted the National Party into government and gave them their mandate to practice apartheid and to oppress democracy. I have always believed that democracy must result in an improvement in the quality of life and economic opportunities for those citizens that are most needy. This is even more so the case in a young democracy like South Africa which has emerged from centuries of racial discrimination and oppression. It is no secret that in South Africa the majority of most needy is made up primarily by Black Africans and that in KwaZulu-Natal the majority of most needy is made up by poor, rural people who, for the most part, are Zulu speaking. To deny our apartheid legacy is to deny that apartheid ever existed. It is no accident that our rural communities are in the grip of a cholera epidemic. Cholera is the inevitable result of a government budget legacy that provides services to some but not to others. In Durban all 350 000 subscribers receive their first 6 000 litres of clean, purified water free of charge while rural women consume, on average, only 7 litres of water per day which is collected from an unprotected natural source. Our current cholera epidemic is a result of this legacy of privileged and underprivileged. The solution is undoubtedly for Government to prioritise water delivery services to those communities most at risk precisely because they do not have access to clean water. Democratically elected governments only remain in office if they deliver on their mandates and are mindful of the needs of their constituents. I need not remind you that the not so democratically elected National Party government stayed in power for 46 years because they unashamedly delivered on their mandate to provide services and create economic opportunities for White South Africans, particularly Afrikaners. Whether you agreed with apartheid or vehemently opposed it, no one should be in any doubt that it resulted in an Afrikaner renaissance. When our President Thabo Mbeki champions the African renaissance, he is championing a just cause. He is championing the need to promote the social and economic upliftment of Africa by adhering to democratic values. This is not something that anyone who loves humanity should be frightened of. Indeed, we should be proud of our South African democracy and our South African renaissance. The Greeks may have invented democracy but South Africa has perfected it. I am proud of what we have achieved and realise only too well that this would not have come about without you. Our starting point in any programme in the KwaZulu-Natal Department of Transport has been to establish an ongoing consultation process with stakeholders. This is known as participatory democracy. It allows us, as a Department, to listen to your concerns, to take seriously your advice and to use your knowledge to improve our services to you. Today's Summit has been called precisely because we have listened and heard the actual problems encountered by you, as Emerging Contractors and we are prepared, as a Department, to correct the flaws in both the conceptualisation and implementation of our programmes. I can assure you that our commitment to work with you through your associations will usher in an intense communication and training programme. We still have a long way to go and I trust that we will continue to work together to turn our collective vision into an economic reality. We are not taking the slice away from the established contractors but we are increasing it in such a way that it accommodates the sector of people who were not in the economy stream before, the majority of which is black South Africans. I hope this is very clear because it is non negotiable. In October 2000, the Honourable Minister of Public Works, Ms Stella Sigcau, introduced the Construction Industry Development Board Bill to the National Assembly. The Board is charged with developing a comprehensive policy framework to rejuvenate the construction industry in South Africa and to ensure that it plays a strategic role in the social development and economic growth of our country. Nominations for members to the Board close on 6 February 2001. I urge you, as Emerging Contractors, to become involved in the nomination process and to nominate real champions of your cause to the Construction Industry Development Board. For all of us, the twenty first century will herald new hope for a reconstructed construction industry in KwaZulu-Natal. Thank you.
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