address at the Italian South African Chamber of Trade and Industries' BOY
Awards, Hilton Hotel, Sandto City
31 October 2007
Giovanni Rabazzotti, President of the Italian Chamber of Commerce
Dorothy Mahlangu, Gauteng MEC for Local Government
Your Excelllency, Alessandro Cevese, the Italian Ambassador
Your Excellency, the Italian Consul-General, Enrico De Agostini
The Consuls from Cape Town and Durban
The leadership of the South African Italian business community
Members of the media
Distinguished guests
Introduction
It gives me great pleasure to be with you tonight to celebrate the South
African Italian Chamber of Trade and Industries, 2007 BOY Awards. Indeed this
is an occasion when we celebrate the role of the Italian business community in
South Africa's ongoing journey of growth and transformation.
In the context of our transformation goals I must presume that the 'BOY'
Award is genderless and is not limited to the achievements of businessmen only.
I therefore assume that BOY stands for Businesspersons of the Year.
The Italian Chamber of Trade and Industries in South Africa supports a vital
bridge between two countries â in fact between two continents. It supports the
role of business, both in our country and in Italy, in making South Africa
prosperous and creating a better life for all our people.
Formal government relations with Italy span many decades. Between 1935 and
today, more than 23 agreements and other memoranda of understanding have been
entered into between South Africa and Italy, with more than half of these
signed in the post apartheid era. These agreements are wide-ranging and cover
areas as diverse as trade, military protocol, science and technology, sport and
culture.
Total trade figures (i.e. imports and exports) with Italy have been
improving since 1994 and there is further opportunity for growth â particularly
in the arena of infrastructure investment. Currently Italy trails other major
developed countries in the size and extent of its investment in Africa.
However, opportunities such as South Africa's hosting of the Fifa 2010 World
Cup Tournament have given new impetus to both government and the business
sector in Italy.
This is the view many Italian businesses expressed during our interactions
following the visit to our country by the Italian Deputy Minister of
Infrastructure, the Honourable Andrea Annunziata and his delegation in November
2006. During his reciprocal trip to Italy in April this year, the Deputy
Minister of Public Works, Honourable Ntopile Kganyago also met and engaged with
a variety of business interests in the fields of infrastructure
development.
Our delegation was stunned by the quality of the infrastructure in Italy.
They returned with many lessons for our own country, including those relating
to maintenance and the preservation of historic buildings and monuments in
Italian cities that have developed over nearly three millennia.
The delegation emphasised to Italian companies the importance of
establishing their presence in South Africa through local subsidiaries as well
as registering on relevant databases in order to access Government information
on opportunities. I am aware that several major Italian construction companies
have registered with the Construction Industry Development Board and are
competing in our market. Hopefully, their expertise will augment the existing
capacity of our industry to deliver the massive infrastructure investment
programme that is currently underway.
Growing Infrastructure Investment - key to Accelerated and Shared Growth
Initiative for South Africa (AsgiSA) and New Partnership for Africa's
Development (Nepad)
Tonight's occasion provides me an opportunity to share with you some views
on the challenges of infrastructure investment and the critically important
role of business.
In 1994, as we transited into the new democracy, we inherited a legacy of
uneven development, a legacy shared throughout Africa and in post- colonial
societies elsewhere. This legacy continues to inhibit our capacity to deliver
infrastructure that supports the full economic participation of our country in
the global market place.
Lack of infrastructure continues to marginalize sections of our population
from economic participation. Infrastructure development therefore occupies a
central position in governmentâs agenda to roll back the underdevelopment of
decades of apartheid and centuries of colonialism.
In South Africa, the inherited backlog of uneven development coincides with
the need for new levels of infrastructure investment to deliver South Africa's
Accelerated and Shared Growth Initiative (AsgiSA). AsgiSA aims to achieve an
economic growth rate of 6% and to halve poverty and unemployment by 2014 in
line with our commitment to the United Nations (UN) Millennium Development
Goals.
With growth in Gross Domestic Product (GDP) at between 4,5 and 5%, we
believe we are on track to achieving these goals and are acutely aware that
infrastructure investment is leading economic growth. Our government is
determined to increase public sector capital budgets at an unprecedented rate
of 10 to 15% per annum and to raise Gross Domestic Fixed Investment (GDFI) from
15% to 25% of Gross Domestic Product (GDP).
This growth path creates immense opportunity for employment, skills
development and for empowerment. It also presents all stakeholders with
challenges that require new responses and intensified effort to grow our
capacity. Our construction industry emerges from nearly three decades of
declining infrastructure investment, under the ailing apartheid economy, into a
period of immense growth. Despite the loss of capacity and skills during the
period of decline, the construction economy has doubled over the last five
years from about R60 billion in 2002.
Construction Gross Fixed Capital Formation (including machinery) is
continuing to grow at over 16% per annum, with some sectors rocketing ahead,
such as Civil Engineering, which grew over the first two quarters of 2007 at
more than 30%.
Ladies and gentlemen, I want to assure you (and this view is confirmed by
construction economists, who tend to be conservative) that this trend is set to
continue way beyond 2010. In fact the 2010 stadiums and associated
infrastructure represent less than 5% of the R320 billion public sector
spending, earmarked between 2007 and 2010.
At the same time, private sector infrastructure investment is also growing
and much of the planned investment consists of major projects requiring a high
degree of expertise.
This investment trajectory means that there is ample opportunity for
offshore companies, including Italian companies, to augment our capacity and to
contribute to the development of our infrastructure, and our country. Indeed,
we welcome new capacity, particularly by companies that are committed to a long
term involvement. Equally, there is opportunity for business in South African
business to expand its role in infrastructure investment.
Indeed, one of the challenges that has manifested with growth in the context
of limited supply capacity and skills, is the escalation of construction costs,
particularly with regard to projects, such as the 2010 stadiums, where cost
estimates were prepared before the growth trajectory kicked in.
As far as government spending is concerned, key infrastructure development
opportunities over the next three years are in the following areas:
* electricity power generation and reticulation with over R70 billion
investments earmarked
* roads, with over R60 billion planned
* rail and ports, with over R60 billion planned
* water, dams, pipelines and sanitation with nearly R40 billion planned
* building including residential and non residential of more than R70 billion
planned.
In addition, over the next five years, the Airports Company of South Africa
will invest approximately R20 billion in new airports and upgrading.
On a lighter note, I am sure all of you are familiar with the ongoing
construction work at our airports in Cape Town and Johannesburg. Some of you
from the construction world may be aware of the reputation that the O R Tambo
International Airport has gained - as the only construction site in South
Africa with its own permanent runways.
Ladies and gentlemen
In delivering the programme of infrastructure I have outlined, our capacity
constraints include the growing demand on construction materials, which
constitute a market of about R95 billion per annum. Most of the building and
construction materials required by the industry are manufactured locally and it
is noteworthy that many producers have planned major capacity increases. Cement
producers, for example, have planned capacity increases of 30% to 2011.
However, imports are available across the product groups, and are particularly
important in high value aspiration products such as ceramic wall and floor
tiles and sanitary ware â in which Italian companies play a leading role.
It is important to note that the delivery of critical infrastructure is also
a central component of Nepad, which constitutes a pledge by African leaders,
based on a common vision and a firm and shared conviction.
Currently, South Africa is instrumental working with other Southern African
Development Community (SADC) members to rebuild the energy supply chain across
the sub-region and beyond. Massive water and road projects are another feature
on the SADC infrastructure development topography and some of these are
integrated within the spatial development frameworks for further growth and
sustainability.
Initiatives to promote information, communication and technology
interconnections are also under implementation. There can be no meaningful
development without trade â and there can be no trade without adequate and
reliable infrastructure.
Shared growth
Ladies and gentlemen, given this investment trajectory our government is
totally committed to ensuring the growth, development and transformation of our
construction industry, and to increasing its inherent ability to promote the
objectives of shared growth, employment, skills and empowerment. We therefore
have established institutions and programme to drive these objectives and to
regulate a level playing field for all construction companies competing on
South African soil.
We are acutely aware that growth on its own does not guarantee full
employment and improvement in the lives of ordinary people. Emerging from three
centuries of colonialism and apartheid, we inherited two inter-linked economies
that we characterise as the first and second economies.
To quote our President, Thabo Mbeki: "The two economies, one developed and
globally connected and another localised and informal. We have therefore
endeavoured to strengthen the First economy and use it as a base to transfer
resources to strengthen and modernise the Second economy and thus embark on a
process to change the lives of those who subsist in this Second economy."
Critical in this national endeavour to bring a better life to millions of
people in South Africa is the Expanded Public Works Programme (EPWP), led by
the Department of Public Works. Government's commitment to this programme is
underpinned by budget allocations that prescribe the objectives of labour
intensity and skills development as central to the delivery of infrastructure.
We are on track to deliver one million additional jobs created through labour
intensive programmes and to provide many of those marginalised from the economy
with skills and opportunity.
Concluding remarks
Distinguished guests, Italians have a proud history in the Southern African
building and construction industry â as craftsmen, foremen, managers,
subcontractors and owners in construction and in the materials supply industry.
Italians played a key role in the construction of the Union Buildings and the
Voortrekker Monument. They have been associated with the construction of Storms
River Bridge in the Eastern Cape, Kariba Dam, Katse Dam, and many others.
Today, companies such as Italtile, Giuricich Bros Construction, and many
others are proud participants in the South African building and construction
industry.
Ladies and gentlemen
I congratulate the Italian Chamber of Italian Chamber of Trade and
Industries on its role in promoting our economy and the role of Italian
enterprises. Business, including international companies that operate in South
Africa, have a critical role to play in support of infrastructure delivery, the
goals of job creation, skills development, black economic empowerment and the
role of women in construction.
We are encouraged by a range of interventions championed by Business Unity
South Africa (BUSA), including material commitment to the Joint Initiative on
Skills Acquisition (Jipsa). As part of the Jipsa process, government has
allocated over R1 billion to the recapitalisation of the engineering faculties
of our tertiary institutions and growing partnerships are emerging between
business and government to rapidly expand our skills base.
Our economic challenges, including those of infrastructure investment, are
critically important, they underpin our democracy, and they guarantee a better
life for all. To meet these challenges, the role of government is lesser than
that of business. Your drive and determination is what our country now calls
into active service. I am confident that together we are more than equal to the
task. We are a winning nation. The Springboks have shown us the way!
Again on a lighter note, I was interested to learn from our delegation to
Italy that, whenever people heard they were from South Africa, they shouted
'Bafana Bafana': which as you all know means â 'the boys.'
Once again I congratulate you on tonight's celebration of the BOY Awards â
and add my congratulation to the Italian Chamber of Trade and Industries' 2007
winners of the Awards.
I thank you
Issued by: Department of Public Works
31 October 2007
