Z Mkhize: Africon Broad-Based Black Economic Empowerment
Transaction

20 August 2007

Programme Director
eThekwini Municipality Mayor, Cllr Logan Naidoo
Chairman of Africon Prof Jakes Gerwel
Chief Executive Officer (CEO) of Africon, Dr Gustav Rohde
Mr Teddy Daka, representing new partners
Rest of the staff from both companies
Distinguished guests
Ladies and gentlemen

I am delighted to be with you this evening. This is my second engagement in
two weeks in which I am witnessing the realisation of a Black Economic
Empowerment (BEE) deal.

You have disappointed many pessimists who have long forecasted the failure
of BEE. A profound question for them: for how long are they going to be
spectators and arm-chair critics? I have a simple message for them: "Where
there is hope, there is life, where there is life, there is possibility, and
where there is possibility, change can occur".

I am delighted to be part of the generation that is witnessing this change.
I thank all role-players who participated in the negotiations that led to this
empowerment deal. I am pleased to learn that these negotiations were
characterised by transparency, mutual understating and most importantly the
desire to convert the province's resource wealth into sustainable growth. I
appreciate that all role-players are here. Clearly this reflects the importance
we all attach to BEE.

I have no doubt that in the next few months many companies will follow in
your footsteps by complying with BEE Act. By doing this, they stand to benefit
from the Codes of Practice for BEE.

Public records show that Africon has reached the status of a Level 4
Broad-based Black Economic Empowered (BBBEE) Contributor in terms of Department
of Trade and Industry's BBBEE Codes of Good Practice. This achievement is not
by luck or miracle but as a result of an understanding of the realities of
Africa, the history, the continent's diversity and aspirations of all
communities. This deal is in line with Pan African initiative such as Nepad.
Such deals further facilitate improvement in socio-economic conditions, the
cornerstone for Africa's economic prosperity.

One of the major driving forces behind BEE, the preferential procurement
section in the scorecard, is the rewarding of companies who buy from small,
medium and micro enterprise (SMME) sector. SMMEs are responsible for an
estimated 50% to 60% of all new jobs created. In terms of the existing
scorecard, companies are awarded 12 out of 20 if 70% of their procurement spend
goes to suppliers who contribute to BEE.

Participation in the BEE also brings with it responsibility. On several
occasions I have discouraged the practice by some consortium of dumping their
BEE partners once the contract has been signed and paying them off.

The integrity of the BEE deal cannot be ensured without transparency and
ongoing empowerment. I have confidence in this partnership. I know that it will
stand the test of time. What make me even more confident is that Africon has
for the past five years listed as one of South Africa's top empowered
companies.

Last week I had an opportunity to address more than 200 women entrepreneurs
at the Women's Economic Empowerment Conference in Ugu District Municipality. In
my address I expressed my disappointment at the low levels of participation by
women in BEE. A research commissioned by the Black Business Executive Circle
last year found that there were 96 women directors in the top 200 list of the
Johannesburg Stock Exchange (JSE) , a mere 4% of the total.

Many women, especially here in KwaZulu-Natal, have yet to see the full
meaning of BEE. This is an issue to be addressed by all stakeholders. For the
provincial government our primary responsibility is to work with you to ensure
an ongoing mentoring of women and to encourage banking institutions to make
finances available to these women.

This government is fully committed to making that process a success. We have
just finalised the provincial government's BEE strategy. The strategy is a
six-point strategy that rests on four cornerstones and will be implemented
through seven programmes.

Most importantly the strategy seeks to ensure:

* empowerment of persons or groups or communities to increase their
ownership and control of enterprises and other productive assets such as
land

* enforcement of the Employment Equity Act

* encouragement of well established firms to engage in corporate social
investment, particularly in the areas of socio-economic development and youth
learnership and apprenticeship.

Economic development

Ladies and gentlemen we have a responsibility all of us here, to ensure that
for the next decade KwaZulu-Natal remain a byword for an economic miracle.
Already we are becoming a case study on how a province that was previously
characterised by political instability and uncertainty could transform itself
into an economic hub, creating job opportunities for thousands of people in the
process.

Our two largest ports, excellent infrastructure, modern telecommunication
and banking systems have been used to attract investors. We are targeted
investors from a number of countries with very strong trade and business links
with South Africa, countries such as Africa, Europe, America, the Gulf and the
Far East. Our main objective for KwaZulu-Natal is to achieve an economic growth
rate of 8% by 2010, by increasing the rate of investment.

Our approach as government has always been informed by the commitment to
influencing the environment in which trade can take place. But it is business
and not governments which must take up the challenge and make the commercial
opportunities happen.

The Chief Executive Officer Dr Gustav Rohde was quoted recently saying "this
empowerment deal is not only limited to our South African equity but
facilitates participation by our new black partners in our global business."
Well, this is encouraging.

I have spoken previously about the significant prospects which exist for KZN
based companies to form partnerships and cooperate. Not only to create job
opportunities for millions of our people, but to take advantage of developments
in the national and international trading environments. This partnership should
therefore be viewed as a response to our call.

There is clear acknowledgement that an urgent need for transformation has
given us no option but to form partnerships. Initiatives such as King Report on
Corporate Governance, Black Economic Empowerment Act and various charters aimed
at driving transformation will only yield tangible results if we co-operate.
The province's business community shares this belief and strongly supports
government's efforts.

The provinces' Growth Coalition, an initiative which brings government and
business together, now speaks with one voice on the issue of BEE. When we
launched the coalition three years ago, we have had great inputs from business
leaders representing companies involved in the following services:

* transport and logistics
* non-ferrous metals
* paper and Paper products
* food and Food products
* clothing and textile
* industrial chemicals
* fabricated metal products
* motor vehicles, parts
* beverages
* travel and tourism

Corporate social investment

There are encouraging signs that KZN companies have adopted a collaborative
approach to ensure sustainable development. Many companies have put corporate
social investments initiatives on top of the agenda and are involved
extensively in the fight against social problems such as crime, drug abuse and
HIV/Aids. We are witnessing companies teaming up with communities and local
municipalities to define development priorities – plan for their attainment and
collaborate in the implementation. This partnership raises levels of
socio-economic development and in the medium and long-term would have a
positive impact on the companies' operations.

Impact of globalisation

Earlier on I pointed out that South African companies must take advantage of
favourable conditions in the international trading markets. We all know that
South Africa is becoming a serious player in the international economy but this
could have a negative.

The World Bank's Global Economic Prospects 2007 states: "globalisation could
spur faster growth in average incomes in the next 25 years than during
1980-2005, with developing countries playing a central role. However, unless
managed carefully, it could be accompanied by growing income inequality".

The report further states: "globalisation is likely to bring benefits to
many. By 2030, 1,2 billion people in developing countries. 15 percent of the
world population will belong to the 'global middle class,' up from 400 million.
This group will have a purchasing power of between $4,000 and $17,000 per
capita, and will enjoy access to international travel, purchase automobiles and
other advanced consumer durables, attain international levels of education, and
play a major role in shaping policies and institutions in their own countries
and the world economy."

As provincial government we've made a decision that we will never allow the
gap between the rich and the poor to widen. We have launched many programmes
aimed at bridging the gap between the first and second economies. One such
initiative is the Co-operative programme which was started in 2005 with an
initial investment of R110 million. Co-Operative allows members of the
community to come together to help themselves in producing or offering services
to other members of the community and other markets.

The co-operative form of enterprise lends itself well to our African values
of ubuntu. Experience has shown that when a development model is in harmony
with a people's dominant cultural value system it stands a very good chance of
succeeding. We then have reason to be optimistic as we embark on the
co-operative revolution.

I call upon the private sector to be part of this revolution. The
co-operative movement provides an excellent opportunity for big business to
participate in the broadening of participation of South Africans in the
mainstream economy.

I would not be doing justice if I do not talk about entrepreneurship,
transfer of skills and the 2010 soccer world cup. I have put forward my opinion
to stakeholders on several occasions and I believe that I have been presented
with another opportunity this evening.

Entrepreneurship

Throughout the month of June and July, the economic development department
has been attempting to develop a strong entrepreneurial culture among young
people. Our main goal is to ensure that KwaZulu-Natal becomes a heaven for
entrepreneurs. We want to do that by creating an environment that will help
them acquire much needed skills in order to be globally competitive.

The private sector, I believe, is in a unique position to understand and
assist this new generation of business leaders. This should be achieved through
initiatives such as learnerships, ongoing education for young entrepreneurs and
provision of access to many of the necessary services and skills required to
get a business up and running.

2010 Soccer World Cup

As we approach 2010 Soccer World Cup, I have no doubt that the country has
enough skilled personnel who will help provide an excellent infrastructure. I
know for instance that Africon boasts in-dept knowledge of a wide range of
markets of industries gained over 55 years. These include:

* asset and project management
* civil and municipal engineering
* electrical and mechanical engineering
* geotechnical and geohydrological engineering
* communications
* environmental management
* infrastructural and sectoral policy development

The biggest challenge lies not in the stakeholder support or ensuring the
provision of excellent infrastructure but rather what happens after 2010. This
calls for a partnership amongst role players such as local communities, stadium
authorities, local and provincial governments, football associations and
parties whose business or interests may be affected by the soccer World
Cup.

Conclusion

As part of Women's Month celebration, on the 30th August we will be hosting
an event to publicly honour and reward women entrepreneurs who have overcome
all odds through hard work and commitment in their quest to establish their
businesses. Ithala Development Finance Corporation Limited, the province's
leading development finance agency has been running Women in Business
Competition for the past three years. This competition targets women in rural
and urban areas. We want to salute women for their contribution in poverty
alleviation and job creation.

Malibongwe Igama Lamakhosikazi!!!

Thank you,
Issued by: KwaZulu-Natal Provincial Government
20 August 2007