SAFCEC CEO Address Annual National Conference 2017
Wednesday, 18 October 2017
Posted by: Steph Swanepoel
Speech by the CEO of the South African Forum of Civil Engineering Contractors(SAFCEC), Webster Mfebe, on the occasion of its 78th National Conference, on 16 October 2017, Misty Hills Hotel and Conference Centre, Muldersdrift, Johannesburg.
Programme Director, Victor Kgomoeswana; Hon. Minister in the Presidency, Jeff Radebe; Outgoing SAFCEC President, Thembinkosi Nzimande; SAFCEC Council Members; our conference sponsor, the CETA; SANRAL CEO, Sikhumbuzo Macozoma; guest speakers; captains of industry; SAFCEC members; distinguished guests; members of the media; ladies and gentlemen.
Congratulations to our SAFCEC Vice President for being crowned the Black Management Forum 2017 Manager of the year last week.
Ready to Deliver: Role of Voluntary Associations in the development of the construction industry
Let me now share with you some thoughts about the role of Voluntary Associations in the development of the construction industry, within the context of our conference theme: ready to deliver.
Historically, formal common interest associations appear to have become prolific during the neolithic period (of, relating to, or characteristic of the last phase of the Stone Age), but to have subsequently diminished in pre-industrial nations. The advent of the industrial revolution precipitated a new proliferation of a multiplicity of voluntary associations. Within this context, the modus operandi took a new dimension with a strong focus on uniting members on the basis of rational-legal sanctions. Modern voluntary associations (VAs) may contribute to social stability and cohesion as adaptive mechanisms for traditional institutions. They may socialize and support individuals caught up in the disorder of social change. They, therefore, act as crucial buffers between individuals and the state.
I am a proponent of the philosophy that says: Infrastructure investment in Africa should not only leave behind physical infrastructure but also contribute towards national developmental goals; economic development; job creation; localisation and skills development.
The Construction industry plays a pivotal role in South Africa's economic and social development. It provides the physical infrastructure that is the backbone of economic activity. It is also a large-scale provider of employment opportunities. According to the 2016 PWC report, the construction industry adds significant value to South Africa and its people. The monetary value received by various stakeholders is often summarised by companies in their value added statements.
- Heavy construction employees represented 77% (2015:83%) of the value created.
- More than 1.38 million people are employed by the construction industry, either on a contract or permanently.
- The state received 11% (2015:9%) of value created in the form of direct taxes. However, the reality is that the state receives significantly more if one takes into account the tax on employee income deducted from employees’ salaries and net indirect taxes like VAT.
The role of VAs in the development of the construction industry is deeply anchored in the desire to collectively promote the common interests of their corporate members, enabling them to be ready to deliver professional construction services, thereby contributing to the attainment of the country's infrastructure developmental objectives and social uplifment. Corporate members have to navigate through a plethora of regulatory and social changes, and also deal with interest groups, which can either advance or frustrate the common interests of corporate members. No single corporate member can survive on their own without the collective industry voice and wisdom.
We live in a world which is in a constant state of flux, a world which is referred to by some experts as WAM, world-after-midnight, also referred to as the Vuka World, whereby everything we knew before midnight has changed into a new reality after midnight. It is, therefore, the duty of voluntary associations, through their collective wisdom, to keep members abreast of new developments in order to adopt new systems and technologies for the development of the construction industry. Otherwise, the construction industry will be like the South African meter taxis that are still operating in the world-before-midnight, whereas Uber is operating in the world-after-midnight.
For example some of the new systems and technologies are:
- Building information modelling (BIM): Building information modelling is an innovative technology and process that is revolutionising the way buildings are designed, analysed, constructed, and managed across the globe.
- Demand for green cement : The global market for green cement is expected to grow to US$38.1 billion by 2024 from US$14.8 billion in 2015. Green cement reduces the carbon footprint of construction activities through the substitution of cementitious industrial wastes. Africa is poised to become a lucrative market for green cement over the next few years due to growing trends in sustainability and energy efficiency for both buildings and infrastructure. In addition to these latest developments, the Green Building Council South Africa (GBCSA) has approved an impressive number of green star-rated buildings. So far, more than 230 formal green building certifications have been achieved in South Africa, mostly in the commercial property sector. Green building in South Africa is on an upward trajectory, enthusiastically embraced and led by the property sector, which is why the construction industry has no choice but to meet this exciting demand that makes complete business and environmental sense.
- Solar and wind energy South Africa’s renewable energy programme has attracted much international interest and is seen to become the global leader. A Norwegian company (Scatec Solar) that won three bids to produce solar energy in SA, has for example moved their headquarters from Germany to South Africa because of the potential of renewable IPP’s in SA. Wind energy is also gaining momentum in South Africa, with the proliferation of wind farms as part and parcel of the renewable energy programme.
Therefore, there is a need for a drastic paradigm shift and join the WAM community, the Vuka World. Voluntarily Associations need to lead from the front. We need to ask ourselves a critical question: are our member companies meter-taxied or are they Uber-rised? If we do not adapt to the pace of the Digital Revolution or third industrial revolution, which has now transitioned into the Fourth Industrial Revolution, we might miss an opportunity for global competitiveness. As we might all be aware, the First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now, a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. Engineers, designers, and architects are combining computational design, additive manufacturing, materials engineering, and synthetic biology to pioneer a symbiosis between microorganisms, our bodies, the products we consume, and even the buildings we inhabit. In the case of Building Information Modeling (BIM), which I referred to earlier, engineers can now, among other things, with 3D modeling technology, oversee, direct and correct the construction of a building site in London, in real time, whilst seating in front of a computer in Johannesburg, thereby gaining some efficiencies in terms of time and cutting flight and accommodation costs, among others. Also the use of drones to gather geological information and monitor difficult and dangerous remote construction sites has become part and parcel of the Fourth Industrial Revolution.
Very soon clients are going to demand these new systems and technologies in their projects and we might be found wanting, resulting in foreign companies that are well equipped, completely taking over. And, we shall start behaving like the technologically ill-equipped meter taxis and protest against these Uber-rised companies by trying to prevent them from operating in our territory. However, it is encouraging to note that some of companies are already embracing some of these new systems and technologies.
Some individual companies still labour under the mistaken belief that they can go it alone and succeed within a very complex, fast-paced digitizing, and often uncertain business environment, without the benefit of the collective wisdom of the industry. The South African Construction industry can develop fast with shared knowledge and expertise, and constant benchmarking against international standards. We either innovate or evaporate! This will require us to be the WAM or Vuka World citizens, completely Uber-rised.
I therefore strongly believe that the Voluntary Associations (VAs) are strategically placed to ensure the development of the construction industry by enabling their members to be always ready to deliver professional construction services to all their clients, both in the public and private sector. However, this will not succeed if VAs are not transformation torchbearers by actively encouraging their own established members to empower black owned construction companies. Development for some is development for none. It is important to note that when you help someone up the hill, you get to the top, yourself as well. Development for some is development for none. From a SAFCEC perspective, we initiated and led a Voluntary Rebuilding Programme(VRP), which resulted in seven of our JSE listed member companies signing a historic agreement with the South African government to accelerate transformation in the industry over and above the Construction Sector Code commitments. As a result thereof, some companies have been partnered with established ones to grow their combined turnover up to at least 25% of the established company's annual turnover over a period of 7yrs. Some companies are on an equity model, for example, the former Murray and Roberts Construction is now 100% black owned and is called: Concor Construction. The Tirisano Trust Fund, has been established to receive and distribute the agreed R1,5 billion, appropriated each year from these companies, to among other things, help with funding for emerging contractors, bursaries for black engineers and artisans, maths and science support for schools and social upliftment projects in poor communities . How these funds will be accessed by interested parties will be announced by the Trust itself in due course after it has been fully established and ready to do so, in an open and transparent manner. Then again, all these positive developments and an all encompassing industry transformation drive will not be completely possible if policy uncertainty continues to bedevil this industry.
Honourable Minister Jeff Radebe, please ensure that your colleague, the minister of Trade and Industry, Dr Rob Davis, promulgates, without any further delays, the Construction Sector Codes that were long agreed by all stakeholders in May 2016. This unnecessary and punitive delay confirms the hard reality of policy uncertainty, with ghastly consequences for business continuity and employment as some companies are rendered uncompetitive for pubic sector contracts, based on a generic scorecard. It is ironic that the Chamber of Mines has cat and mouse court battles with the minister of Mineral Resources, Msebenzi Zwane, for lack of consultation on the Mining Charter, whereas on the other hand, all construction sector stakeholders have long agreed on theirs, in consultation with and supported by the Departments of Public Works and Trade and Industry. With due respect, Honorable Minister Radebe, only an insane investor will pour their money into an industry, whose applicable policies render it uncompetitive for public sector infrastructure projects. It is a retrogressive step in meeting the NDP targets of 30% of fixed investment by 2030. Who is going to build the much needed infrastructure when the construction industry is being suffocated to a slow painful death by policy indifference. We urge you, in your capacity as minister in charge of monitoring and evaluation of all government departments, to intervene decisively because as far as I am concerned, Honourable Minister Dr Rob Davis, is fast asleep on the job as far as this urgent matter is concerned. I don't think we need to wake him up with a court action as we, in the construction sector, prefer to solve matters with government amicably, but, if I need be, we won't hesitate to exercise our legal rights in an open and democratic society. Consequently, this unwarranted delay hampers the development of the construction industry in South Africa and the Voluntary Associations will simply be spitting against the wind in so far as leading efforts towards industry development.
Once more, thank you, sir, for honouring us by coming to deliver a keynote address at our 78th Annual Conference. Your respect for our industry doesn't go unnoticed, whist others are treating us with utter disdain.
I thank you