BBC lists transformation demands for construction sector

Johannesburg – The Black Business Council in the Built Environment (BBCBE) says it won’t be sidelined in achieving transformation in the construction industry through the voluntary rebuilding programme.

Speaking at a briefing on Friday, BBCBE secretary general Gregory Mofokeng laid out its demands to ensure transformation in the sector. This follows a settlement agreement reached between government and seven construction companies implicated in collusion in various projects last year.

The settlement of R1.5bn is to be directed towards socio-economic development over a 12-year period, as the Tirisano Trust Fund. The firms Murray & Roberts, Basil Read, Stefanutti Stocks, Aveng, WBHO, Raubex and Group Five committed to promote transformation in the sector. This involves partnering with developing smaller, black-owned construction companies. They also committed to taking steps to avoid collusion and corruption in their dealings.

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However, the BBCBE said that its role as an “architect” of the programme has been diluted.

“As far as some of the stakeholders are concerned, especially the listed companies, an impression has been created that we have been mere spectators from being the co-architects of this very important programme,” said Mofokeng.

“The original VRP (voluntary rebuilding programme) agreement was co-authored by ourselves and Safcec (the South African Forum of Civil Engineering Contractors)... we expect to play a meaningful role in the implementation of the programme... the listed companies have a tendency to ‘juniorise’ our role,” he said.

The BBCBE had reached out to all seven companies. However Basil Read had not responded, said Mofokeng. “Basil Read we have written to them on numerous occasions; they have not responded to our letters.”

The council also has qualms over the way Murray & Roberts is implementing its transformation objectives.

Transformation by BBCBE design

Regarding the Tirisano Trust Fund, the BBCBE has made a submission to government proposing that 50% of the funds - R600m - be invested back into the industry as working capital and construction guarantees for emerging companies, explained Mofokeng.

As for the transformation pillar of the agreement, the BBCBE wants companies to make available 25% of their annual turnover to the emerging sector consortia, as opposed to individual companies. Firms can also choose to sell equity of no less than 40% to black investors.

The BBCBE had noted that WHBO and Raubex were willing to select black consortia to benefit. However, the BBCBE added that it would not support a partnership between Stefanutti Stocks and two black companies, as it does not “buy into” the proposed broad-based beneficiary model.

Murray & Roberts, Aveng and Group Five have elected to take the equity transaction route. Regarding this, the BBCBE wants black contractors, and not only black investors to benefit from this. The council wants black executives to be appointed, in operational and not non-core roles.

“We need black investors who will become operationally involved and make sure that transformation cascades to all operations of the business, all the way to construction sites,” he said.

He also added that black companies should not think it is their “birthright” to benefit from the voluntary rebuilding programme. “If you are a black company and you don’t want to share the benefits of this programme with other black companies - either as a consortium of members, subcontractors or suppliers of goods and services - we will make sure that you are effectively removed from this programme.”

Mofokeng added that if the companies and other stakeholder do not comply with their vision, the council has “levers” at its disposal to take action. Mofokeng said this involves reaching out to the government and the courts.

“We have a constant discussion with government on the implementation of the VRP (voluntary rebuilding programme). We will go to courts if we do not get joy from our conversations with government.”