The launch of public works minister Stella Sigcau's empowerment charter process for the construction industry towards the end of last year was characterised by irritation.
"Ladies and gentlemen of the construction industry, do not make a mistake by assuming that . . . you will be able to go through the motions and make insignificant, cosmetic changes to the industry," said Sigcau.
The minister could be forgiven for her strong words. Over the past five years her department has proposed several interventions to promote transformation in the industry, but to no avail.
These initiatives include a comprehensive preferential procurement policy that has been undermined by rampant fronting. The department also facilitated the formation of the Construction Industry Development Board to ensure sustainable industry development and transformation.
Yet the industry remains relatively intransigent and has been overtaken by other sectors that started discussing transformation much later.
Sigcau told the industry that it would not be business as usual and that by 2008 more than 30% of the industry should be black owned. She also said government was expecting a charter and scorecard before June 2005. This is a tight deadline, given the amount of consultation that needs to be undertaken.
The construction sector landscape is complex because of the many small to medium-sized enterprises, which account for more than 50% of the industry's annual turnover. These could suffer badly if the charter agenda is predominantly influenced by larger companies such as Aveng and Murray & Roberts.
"I think the industry could deliver a charter somewhere during the course of 2005," says Aveng MD Carl Grim. He stresses that the drafting of the charter needs to be preceded by an exhaustive consultation process that must limit the domination of the big groups.
The big groups are able to make headline-catching deals that may be difficult, if not impossible, for smaller groups to conclude. Aveng has already concluded a black economic empowerment (BEE) deal that will go a long way in boosting its BEE credentials. It sold a 25% stake in its largest operations, Grinaker-LTA and Trident Steel, to empowerment consortium Qakazana Investment Holdings.
Aveng's move has placed pressure on other big groups and this may result in a flurry of BEE deals during the year.
Certain sections of the emerging black-owned contractors sector have already raised concerns about being left out.
National African Federated Chamber of Commerce general secretary Aubrey Tshalata recently said: "In principle, we are in agreement with the idea of a charter, but see dangerous signs that may perpetuate elitism within black empowerment ranks," (Business October 15).
Tshalata's fears are justified when one considers other sectors that have already gone through the charter process. Under pressure, companies rush for BEE deals that allow only the top black empowerment brass to derive substantial benefit. Small and emerging players are excluded.
At the time of going to press, the first draft of the charter had been completed and was released for comment.
