10 March 2006
	BASIC INDUSTRIES A CALL to embrace CHANGE By Mzwandile Jacks The industry has accepted the need for transformation, but fronting remains a problem

The FM, along with many industry watchers, has had a love-hate relationship with SA's construction sector. The FM applauded it when it first proposed several interventions to promote transformation in the industry. But when it failed to do this speedily, it said the industry "remained intransigent". The fact that most stakeholders in the industry failed to discuss their black economic empowerment (BEE) plans with government irritated the state, particularly public works minister Stella Sigcau. Now the final draft construction charter has been sent to parliament for approval, it appears that though the industry first seemed unwilling to transform itself, it has heeded the call to change. SA construction enterprises have committed themselves to achieving 30% ownership targets for black people within the next seven years. They have undertaken to ensure that 10% "economic interest" is held by black women in this sector and there is 10% participation by black women in voting rights. Second , the top three construction companies listed on the JSE have all announced their empowerment partners. They did this after sectors such as mining and financial services, but they have been praised for their bold steps. SA's biggest construction company, Aveng, has sold 25% of Grinaker-LTA and Trident Steel, its construction and steel operating subsidiaries, to a Tiso-led BEE consortium for R496m. Construction group Murray & Roberts has completed the buyback of R500m worth of its own shares in an effort to introduce broad-based direct black ownership in the company. Black consortium iLimaMvela has acquired 26,1% direct black ownership in Group Five. The sector has become less fragmented and there is a greater sense of unity in its interaction with government. Some stakeholders believe transformation has to be quick if the sector wants to get support from all quarters. SA Federation of Civil Engineering Contractors (Safcec) president Bryan Westcott says change and adaptation is imperative. "Despite this basic point of departure, there seems to have been a perception that our organisation is against change and progress. We are committed to the economic ideals of the country." However, fronting is still rampant in the industry. In August last year, Sigcau said 15 companies, mostly small and medium-sized enterprises, faked their status on contracts worth R440m with her department in the past two years. "There are some unscrupulous white contractors, but there are black opportunists too who use their historically disadvantaged individual status and political contacts to win tenders and then sell the contracts to established contractors."