Amended BEE codes to cost construction and engineering industry

Posted On Tuesday, 12 August 2014 09:32 Published by
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SA's construction and engineering industry is told failure to comply with amended black economic empowerment codes by April 30 next year will leave them out of pocket.

Lefadi Makibinyane

The state wants more blackowned companies to participate in R4-trillion worth of infrastructure spend over 15 years. But built environment professionals were also handed an olive branch at a seminar held last week by industry body Consulting Engineers SA (Cesa) in Johannesburg, when they were told they could influence the "alignment" of the existing charter for the construction sector to achieve "meaningful transformation" in the industry.

One of the most critical changes facing businesses in general is that their overall broadbased black economic empowerment status will drop when measured by the new codes. This is mainly because of strengthened requirements for black ownership in the industry, and skills and enterprise development. However, observers point to a significant lack of clarity over the new codes.

They also say the deadlines for implementing sector-specific changes may be too ambitious. "Without adjustment to these requirements, (construction) companies are at risk of losing their government contracts. The tick-box approach to BEE is over," Murray Chabant, CEO of empowerment consultancy Signa, said last week.

The requirement for revised sector codes comes after the competition authorities reached fast-track settlements with 15 construction companies, fining them a total of R1.46bn for bid-rigging, market division and price-fixing in infrastructure projects leading up to the 2010 Soccer World Cup.

Competition Commissioner Thembinkosi Bonakele has also warned of further much less lenient penalties for firms that did not settle. To this end, Cesa CEO Lefadi Makibinyane said there was a "serious trust deficit" between the government and the private sector. This had been somewhat ameliorated by President Jacob Zuma having initiated the Presidential/Business Bilateral for Inclusive Growth.

Jacob Maphutha, the director for BEE at the Department of Trade and Industry, said the government and the private sector needed to drive transformation in respect of a newly "aligned" construction sector charter. "We need to jointly set targets to ensure there is transformation." Mr Makibinyane said Cesa members embraced transformation and the need to resolve the skills shortage. "Everyone is seeing it as a way of doing business in the country."

But he had said earlier that if South Africans were serious about moving the country forward, it was time to implement the government's planned 18 strategic infrastructure projects. This required consulting engineering firms to contribute to designing world-class, sustainable structures that would improve the quality of life for SA's people.

To this end, Mr Makibinyane urges the strengthening of the Presidential Infrastructure Coordinating Committee to include a public-private partnership "with a difference", forming a high-level project development, facilitation and monitoring agency reporting to government and business.

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