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SAFCEC Statement Regarding Agreement Concluded with SA Government

Tuesday, 11 October 2016   (0 Comments)
Posted by: SAFCEC Communications
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Statement delivered by Webster Mfebe on 11 October 2016, IDC Offices, Sandton, Johannesburg

TIRISANO TRUST  – (Meaning Partnership / Working seamlessly together)

This is indeed a landmark agreement or partnership that will have a positive impact on the construction industry, for government in rolling out our sorely needed infrastructure in South Africa, and for the Infrastructure sector in South Africa and across our African continent as a whole.

PARTNERSHIP to implement a programme of initiatives that will focus on the development and transformation of the industry through:

  1. Increasing investment in the sector to promote development, educational and upliftment opportunities for all, especially for black people;
  2. Creating employment and entrepreneurial opportunities, especially for young South Africans;
  3. Promoting and supporting black-owned construction companies and small business development and assisting them to be competitive and sustainable;
  4. Identifying opportunities for South African companies in infrastructure projects elsewhere on the African continent; and
  5. Building deeper partnerships with regulators and other key stakeholders such as Government and organised labour.

All parties to the Settlement Agreement acknowledge the need to foster a better relationship between the Government and the construction industry going forward.

The Settlement Agreement promotes three elements, which I will not repeat as the Minister Patel has already mentioned those in the joint press release. I will therefore go straight to the positives of this agreement from the industry perspective.

1. Financial Socio-economic

The seven currently committed Construction Companies will collectively contribute R1,5 billion over 12 years to the Fund, which will be established for socio-economic development. The objective of the Fund will be the development, enhancement and transformation of the construction industry, as well as the promotion of social infrastructure for all South Africans.

Initiatives will include:

  • The development and promotion of construction companies owned and managed by black people,
  • The provision of bursaries for black students, and providing support for learning institutions through bursary programmes and infrastructure development.
  • It also includes funding the appointment of professionals to provide the Government with engineering, project management and other services to strengthen its capacity to deliver the public infrastructure needed through, amongst others, the secondment to state departments and entities of skilled personnel from organisations operating in South Africa.

This financial contribution is in addition to existing annual socio-economic development investment spend by these companies.

The Settlement Agreement stipulates that:

  • Over the next 12 years, the seven Construction Companies will be required to make a collective, annual payment of R125 million into the Fund (assuming that all six companies that are ready to sign today plus Murray & Roberts, who are still going through their internal governance processes, have all signed ).The Fund will be constituted as a trust (“the Trust”).
  • The Tirisano Trust will be co-operatively governed by a Board of Trustees appointed by the Government, the Construction Companies and the South African Forum of Civil Engineering Contractors.

2. Transformation

In addition to existing enterprise development programmes, each of the Construction Companies will commit to initiatives that will result in each of the companies mentoring up to 3 emerging black-owned enterprises so that they develop the necessary skills, systems, status and quantity of work to be able to sustain a cumulative combined annual revenue equal to at least 25% of each of the mentor companies’ annual revenue by 2024. The referenced revenue is from civil engineering and building works delivered in South Africa.

The Settlement Agreement also stipulates that the Company will be released from its responsibility for the development initiatives of the Emerging Contractors above if the Company disposes of not less than a 40% economic interest in its South African civil engineering and general building construction business, to an enterprise that is more than 51% black owned, managed and controlled.

3. Integrity Commitment

This involves the Construction Companies, as leading companies in the industry and Government, committing to business practices that are based on integrity, transparency and fair competition, and that they will expose, confront and eradicate any sign of wrong-doing in the industry.

Positives of concluding the Settlement Agreement from SAFCEC and listed companies perspective :

1. Creates a concrete new working platform between the construction industry and the Government focused on:

  • increasing investment in the sector,
  • creating quality jobs and entrepreneurial opportunities (including for young South Africans),
  • driving transformation in the sector,
  • promoting innovation,
  • combatting collusion and corruption,
  • identifying opportunities for South African companies in infrastructure projects elsewhere on the African continent,
  • promoting industry supply chains and helping them to be competitive, and
  • building deeper partnerships with regulators and other key stakeholders including labour.

2. Gives certainty to stakeholders that any existing or potential claims from identified public entities on identified projects, as well as the associated litigation costs and disruptions to operations are addressed. 

3. By committing to the critical transformation initiatives of the Settlement Agreement, the construction sector in South Africa will be a more sustainable and competitive industry, ready to partner with Government and related public sector entities for the advancement of infrastructure development in South Africa and across the African continent for the benefit of all South Africans.

4. This settlement brings resolution and conclusion to the Construction Industry Development Board (“CIDB”) enquiry and proceedings against the companies who are signatories to the Settlement Agreement.

In conclusion – this agreement signifies the Government’s and Construction Companies’ commitment in promoting growth, investment, sustainability, inclusivity and transformation in the construction sector; thereby driving and supporting the much needed infrastructure investment and development in South Africa, the region, and across the African continent.

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Major Participants in the SA Construction Industry Reach Transformative Agreement with Government

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