S Sigcau: Signing of Construction and Property Charters

17 March 2006.

MECs of Public Works
Members of Parliament
Captains of the construction and property industries
Members of the Construction Transformation Charter Group
Members of the Property Transformation Steering Committee
Acting Director General Dr Sean Phillips and the top management committee of
the Department
Members of the media
Ladies and gentlemen

When I stood before you to launch the process for the development of the
Construction and Property Charters it was in this historic city, which today is
the capital of a democratic country.

Indeed when we gathered in Pretoria in October 2004 it was to commit
ourselves to the full-scale transformation of the construction industry. Later
that year, we gathered again in Gauteng the richest province in Africa to mark
a process which would oil the engine of transformation in the property sector.
Principally we met so we could play midwife to the birth of not only bigger
conglomerates from among the established players in these sectors. We met also
to ensure that the growth of the property and construction sectors takes
cognisance of the socio-economic challenges of our country.

In point of fact we met to ensure that black people and women as a matter of
course become an integral part of the beneficiaries of these sectors. This is
so we could address the gross inequalities of the past while rising to the
challenges of the present and the future.

As we meet in this grand hotel today, we can from a distance still hear the
dignified steps of the Robben Island prisoner who raised his fist defiantly as
he entered a world unknown only secure in the hope that one day, Africa would
be free.

We meet today etched in our collective memories the rallying cries of the
unarmed youth of 1976 who 30 years ago swelled the ranks of the liberation
armies. They were prepared to pay the ultimate prize, which was death, yet only
secure in the hope that one day all of Africa would be free.

We should be able to hear, even if it is 50 years ago, the defiance of the
women of all races who descended right here on the Union Buildings to demand
humanity for all, secure in the hope that one day, Africa would be free.

We have over the past years collectively made of the Union Buildings what
the world never imagined possible, an example that the Age of Hope is not a
dream. This is testifies to the limitless ability of the human species to
fashion peace from despair and desperation.

Today we look back at the distance we have travelled over the past year and
a few months and welcome the culmination of negotiations around the two
Charters. It was never an easy job seeking to introduce transformation in
sectors whose share value is destined to rise exponentially over the coming
years. It is perhaps much easier seeking to turn the course of a sinking ship
because in conditions of distress any offer of assistance will do.

With reference to the built environment specifically, we are faced among
others by the following reality. The total number of registered engineers
declined from 15530 in 1998 to 14900 in 2004. The resulting ratio of citizens
per engineer is 2923. By way of comparison this ratio is 184 per engineer in
Australia and 220 in the United Kingdom (UK).

South Africa has three point nine (3.9) registered quantity surveyors per
100 000, compared to 35 per 100 000 in the UK. In Local Government there are
between 400 and 500 vacancies for built environment professionals as we speak.
A survey being conducted by government indicates that there are 800 vacancies
for built environment professionals at all levels within national and
provincial governments.

According to the Engineering Council of South Africa it is estimated that
500 to 800 engineers will be retiring annually from 2009 onwards. This exceeds
the numbers who are currently graduating and to make matters worse, a very
large percentage of current graduates are emigrating. In fact I am told that in
2001 more than 90% of graduates emigrated.

The built-environment professionals I am referring to are a critical
resource if we are to live up to the challenges we face as a country. These
challenges have been outlined in the Accelerated and Shared Growth Initiative
of South Africa (AsgiSA) including halving unemployment by 2014. AsgiSA
consists of a set of interventions which are intended to serve as catalysts to
accelerated and shared economic growth.

The two sectors represented here today have an opportunity to make a
significant contribution to AsgiSA and in ensuring its success. We are to play
our role in driving economic growth from the current four point six percent to
six per cent and beyond going forward. Government is focusing on a massive five
year investment plan in energy, transport and infrastructure by attracting
foreign investment and boosting economic growth. Infrastructure spending by
Government and state owned enterprises will be around R370bn in the next five
years.

As these two sectors we have a critical role to play in the provision of
infrastructure for projects such as Gautrain and the 2010 Soccer World Cup
among others. We will no doubt play no lesser role in the provision of other
economic and social infrastructure including housing, roads and shopping
centres.

I believe it is important to remind ourselves of the backdrop against which
these charters set sail today as we officially sign them today. We must be
under no illusion; this is not the end, but the beginning of hard work. It is
so, simply because we have such a deficit to address, in terms of social,
economic and what I call human infrastructure. We must at all times be aware of
our responsibility not only to those who live today and those who will come
tomorrow. It is to those who have sacrificed their lives so we could be
here.

From the figures I have quoted above it is clear that we need to be
investing more and not fewer resources in re-engineering human infrastructure,
the critical skills base that we all speak about. The construction and property
sectors will have to face the issue of scarce skills in general and the
under-representation of blacks, women, and youth.

For this reason we have insisted as government that human resource
development be a significant part of the negotiations leading to the charters.
Ownership cannot be vested in a few hands. We must transform the skewed
ownership patterns and make sure those properties in black hands in townships
and rural areas also begin to attract economic value.

To this end the Property Charter proposes a range of targets including the
transfer of 25% of assets of the sector to black hands in five years' time. The
charter also seeks to set aside 10% of private corporations' annual development
investments to underdeveloped areas. In the property charter the sector has
committed to achieving 40% black representation at board level 20% of whom will
be women.

The construction industry stakeholders have agreed to an ownership target of
30% for black people. Similar to the Property Charter, the Construction Charter
proposes a target of 40% black representation at board level, 20% of which are
women. In order to ensure that the economic benefits of the current and planned
infrastructure investment accrue to all sectors of our community, the
Construction Charter proposes a target of 70% for procurement.

Both Charters advocate and emphasise the importance of skills development
through training, mentorship, learner-ships and bursaries. We now have an
opportunity as a sector to invest in human capital and the future of the
sectors.

The sectors would not have achieved much if they did not address the issues
that negatively impact on workers, which include living and working conditions
of labour, ownership share schemes, health and safety and relevant and
appropriate grooming of workers. I am therefore glad that the construction
charter has set a target for broad based groups with a specific mention of
employees.

As a contributing and vital sector to the South African economy, we have a
responsibility to ensure that our industry is in the forefront in the
implementation of social responsibility programmes. Let us challenge ourselves
to making sure that our corporate social responsibility programmes are focused
on developing and adding value to our society and communities. The construction
sector has a tremendous opportunity to contribute to the development of the
sector and infrastructure in our country. The time has now come for us to start
ploughing back in to our communities meaningfully.

These targets are just the beginning. The fact that we have now signed the
charters does not mean we must relax thinking we have achieved our objectives.
The Charters are merely a mechanism which is only as effective as the energies
of champions who will be given the responsibility to implement them.

I would like to commend members of both the construction and property
sectors who have already or are in the process of finalising black economic
empowerment deals. This tells me that these charters are already bearing fruit
and will contribute in no small measure to the full-scale transformation of our
country and the realization of the Age of Hope.

I would like to thank the co-chairmen of the Integrated Management Committee
Messrs James Ngubeni and Mike Wylie and members of your negotiating teams,
Chairperson of the Property Steering Committee, Mr Andy Tondi and your members
for the hard work you put in. I would also like to express my gratitude to the
committee which I appointed to advise Government and to represent us in the
negotiations in the development of both Charters. They are Teddy Daka, Molly
Gallant, David Moshapalo, Mpho Mosimane and Thandi Ndlovu. You have all
performed your national service with distinction and given us reason to believe
that we are indeed living in the Age of Hope.

To all the stakeholders I say these are your charters. Adopt them, nurture
them and make sure they guide us all through the long journey ahead of us.

I thank you.

Issued by: Department of Public Works
17 March 2006