In light of South Africa’s economy, and its future, the myriad of contributors to its success are made up of many idealistic realities that often seem far fetched. One hinge of the country’s GDP growth, success and stability is known to be the construction sector. Which, in any developing country is often the back-bone of employment and skills-development that bolster a nation as it strives to achieve world-class status. South Africa’s construction industry is one that has met some significant challenges, with notorious competition commission fines, imbalanced BEE structures, and reports of there not being enough work to go around in the industry to truly support what should be a thriving sector. Thabo Masombuka, Chief Executive of the Construction Sector Charter Council, discusses just how the balance of growth and broad based equity need to embedded in the sector, and if a booming, transformed construction industry is actually on the cards in the near future. – LF
GUGULETHU MFUPHI:  The construction sector is seen as key to the country’s growth and the success of the National Development Plan. Thabo Masombuka, the Chief Executive of the Construction Sector Charter Council joins us now for more. Thabo, thanks for your time today. The thought process that construction will no doubt apply to South African growth in GDP doesn’t always link up with what we hear from Chief Executives from construction companies themselves, because they say there isn’t enough work or perhaps that the budget is slightly limited, from the State side. What is your view?
THABO MASOMBUKA: Well, I think it depends on what side of the coin you’re looking at it but the reality is that for any economy to prosper, it needs infrastructure to drive that economy. Therefore, the construction sector in South Africa becomes pivotal in driving that economy and especially development, because we can’t continue to have an economy that’s exclusive or excludes one sector of the population. Our understanding is therefore, that infrastructure development in South Africa must be fair and equitable, and accessible to those that historically, were not apart, so that we can then drive numbers, and we can drive the economy.
ALEC HOGG: Thabo, it’s interesting. You were at the DTI, running the BEE there.
THABO MASOMBUKA: Yes.
ALEC HOGG: We’ve seen a lot of enrichment. How do you guys feel about that? Now, particularly, you are talking about further transformation of the economy and clearly, everybody knows that that has to happen. Is it going to be another group of people getting enriched or is there going to be empowerment on a broad based and if so, how are you going to ensure that that happens?
THABO MASOMBUKA: The underlying objective for empowerment trajectory in South Africa is that it must be broadly accessible. Now, I was part of the team at the DTI that re-engineered the whole policy and framework, to say it must move from a narrow conceptualisation or focus, to a broad based, serving element but with the focus of communities emerging, designated groups, your women, children and disabled. My role at the CSC is to, currently, drive those drivers, and make sure that the empowerment framework that underpins the construction sector must be benefitting those historically disadvantaged groups of communities. In particular, emerging contractors, so that you move away from your usual suspects, the few connected individuals, so you make sure that communities take part and feel meaningful engagement with the economy.
ALEC HOGG: Over the last decades, and I’m talking about a couple of decades now, we in the media, have continuously been saying, ‘but this is not right. It has to be broad based. It has to be for exactly the kind of people that you are talking about’, but it’s almost like business executives on the one hand and clearly, the elite, through the beneficiaries, on the other hand have been more powerful. Their voice has been more powerful than the voice that you have. Has that swung? Has it now become a case where we will not see people being enriched? We will see the communities benefit.
THABO MASOMBUKA: We are starting to see more, positive trends. We are starting to see more and more pressure exerted at all levels and angles. If you recall, in the initial stages of BEE it was more optional, people who choose whether or not, they really want to do BEE. Some would go to the extent of saying ‘what’s in it for me and my company and my shareholders? Why do I need to do this?’, but the more pressure got exerted from supplier based, from Government, from licenses and regulators. You started to see more companies incorporating BEE as a business imperative, which is critical in ensuring that BEE is no longer just a tick box, but more of a certificate. That BEE Certificate is becoming a very influential and critical instrument in determining a bid, if you are bidding for public sector. It is also becoming a reflector of your business, so it is not enough to say you are a Level-one or a Level-two. You must now demonstrate, meaningfully the extent to which you are a Level-one, and Level-two to meaning to what extent are you bringing your suppliers on board. Are you paying your suppliers on time? Enterprise Development: are you doing it meaningfully? Skills: to what extent are you investing your skills? One of the results of the studies that we released in April tells us that there’s little investment in skills development in the industry, which is a worrying trend.
GUGULETHU MFUPHI:Â So how do we change that?
THABO MASOMBUKA: We need to start to change the drivers. We need to say, and there’s a process that we are going to engage extensively with; that aligns the construction sector code with the new BEE codes. We are going to say for companies to get full and meaningful recognition; they must start to invest in skills, which means they must demonstrate to the verification agencies that not only have they spent on skills, but to what extent has that ‘spend’ translated into meaningful and critical skills, which are vital to building the future of the industry.
ALEC HOGG: What is the status of trust between Government and the construction industry, in particular? We had all the allegations of collusion. We had all the fines that were paid. Has it now normalised?
THABO MASOMBUKA: It is always going to be a process. It is always going to be a thorny process because, as you say, we are just fresh from an era of collusion where Government had to use competition authorities to force people into full disclosure. Some have not. Some have, which is positive, but I think the relationship of trust is mending again, but, as always, the relationship between Government and business has always been characterised by mistrust.
ALEC HOGG: Especially in this country.
THABO MASOMBUKA: Especially in this country, where you have business accusing Government of lack of consistency, changing the goal posts and the rules time and again, and you have Government accusing business of focusing on profits – nothing else but profits – and do not want to commit to broader access and transformation. We’re seeing a lot more proactive engagement. For instance, the Council that I represent, the Department of Public Works represent Government in that Council and it is part and parcel of the deliberations within the Council to drive the transformation trajectory, within the construction sector, so we’re seeing more and more positive trends.
ALEC HOGG: And maybe what happened to the construction sector, with all these big fines and the investigations, might have jolted something there and given you the ability to now get back to ‘ground zero’ and start working from a ‘proper base’.
THABO MASOMBUKA: The good thing about the collusion chapter is that it has given the country an opportunity to self-retrospect, introspect in fact, to say what have we done wrong and how can we correct our mistakes? It has given the industry an opportunity to raise their hand and say ‘we could have done better’. What is needed now is not for Government to labour beyond the point consistently/ persistently, but we need to say ‘all right, now that we have passed the World Cup stadia collusions and price readings, what are the imperatives for the industry?’ We all know what those imperatives are. They are very clear. They are imminent. They are in our face. It is unemployment; it is lack of skills, lack of women participation, lack of youth, and disabled people not getting their fair share of participation. We all need to get together and fix that. It is no use pointing fingers and saying ‘hey, you are called leaders but here you create the rules’. We need to get together and say ‘how do we create an industry that is sustainable to create jobs, so that we have the sustainability in this country?’
GUGULETHU MFUPHI: Maybe on that point, as you say, to get those women empowered as well as the other people in the community involved, we need more projects and Alec and I were just talking yesterday about our ratings. It was with regards to a gentleman from Brand SA that back in 2010, there was this ‘feel good’ air. A feeling of, you called it, ‘active citizenry’. That’s the word, active citizenry, where there’s a feeling of optimism in the air. In the construction sector, without 2010 and new World Cup stadiums being built, where are we getting a feel for optimism within that particular industry?
THABO MASOMBUKA: The feeling of optimism is re-injected again by the investment in massive infrastructure projects. Then we were responding to a global sport competitive, or should I say positive pressure, where all of us had to demonstrate to the world that we can perform, and we can deliver. We therefore all mobilised behind the euphoria of a nation built behind the vision of reconciliation. Now the trend is different. Now we must ensure that the infrastructure in South Africa absorbs jobs. It creates an environment for the economy to thrive, so that those who are producing or manufacturing goods in the Free State, must have the smooth offer of transporting those to Limpopo, and Limpopo can deal with the Eastern Cape. The Eastern Cape can deal with North West without any infrastructural backlogs. The CIPS as articulated by the Presidential Infrastructure Commission is becoming one of that blueprint that sort of unites us again to say, we need to be those thought leaders and infrastructure leaders in the Southern African region and indeed, throughout the African Continent. South Africa is, once again, I think, becoming the thought leader in ensuring that those things happen.
ALEC HOGG: What’s holding up the Presidential Commission? You would have thought by now, it’s been around for over a year, that it would have triggered some more infrastructural development but, as Gugu said earlier, we hear from the CEOs of the construction companies that it is just battling to get off the ground.
THABO MASOMBUKA: I think the most critical challenge there is to find the right skills in the right projects. You cannot risk, once again, having the Tonga’s of this world. You have a Tonga Mall that collapsed. You cannot risk mismatch of skills and competencies. I think what may have been the holdup is to make sure that once we start to roll out a project, we need to make sure that people with the right requisites are deployed into the right projects so that we are able to deliver sustainable buildings, sustainable infrastructure, and sustainable road networks. I think that’s, to me, critical in ensuring that we see an industry that’s sustainable.
ALEC HOGG: It’s taking time but it will come.
THABO MASOMBUKA: It has to come.
ALEC HOGG: That was Thabo Masombuka, who is Chief Executive of the Construction Sector Charter Council.
