DATE: 4 April 2005

COMMITTEE MEMBERS PRESENT

African National Congress

Mr. F Bhengu (Chairperson)

Mr. NJ Gogotya

Mr. LB Maduma

Ms CPM Ramotsamai

Mr. S Siboza

1. Department of Public Works (DPW)
2. Previously Disadvantaged Individuals (PDIs)
3. Council for Built Environment (CBE)
4. Emerging Contractor (EC)
5. South African Natiana Defence Force (SANDF)
6. Black Economic Empowerment (BEE)
7. Small, Medium and Micro Enterprises (SMME)
8. Extended Public Works Programme (EPWP)

1. Mr. T Adams (Comcordia)
2. Mr. R Koopman (Imulsa 279 cc)
3. Mr./s F Leny-Hassen (Investec)
4. Ms Mvandaba (Mvandaba Cleaning Services)
5. Ms N Matanda (African Out Back Services)
6. Mr. D Wisani (Dumile Construction)
7. Ms Y Beukes (Khaya Women’s Project)
8. Mr. A Mokweni (Chairperson CBE)
9. Ms M Neluheni ( CEO CBE)

1. National Assembly

A presentation was made to the Committee by a representative of the Khaya Women’s Project, on behalf of several small businesses, including: Imvusa Trading, Dumela Construction, African Outbacks Services and African Construction. This presentation, together with inputs from other representatives, mainly highlighted the problems they were experiencing in trying to access the benefits of the formal economic sector in general. In particular, the presenters highlighted the difficulties they experienced in dealing with a number of local and provincial bodies, as well as parastatals. These problems included the following:

• The Western Cape Department of Public Works and Transport

• Numerous problems, such as lack of professionalism and an unco-operative attitude from officials, were experienced in their interaction with the regional Department.
• Small businesses were frustrated, as they approached the Department for help, but instead, experienced delays, additional costs and a refusal to deal with queries about the basis on which tenders are awarded.
• Many consultants are white, and are perceived as unsympathetic and unable to relate to the problems experienced by small, medium and micro enterprises (SMMEs) and PDIs.
• In summary, the regional office is perceived as more of a hindrance than help - instead of being a practical manifestation of Black Economic Empowerment (BEE), the regional department was not empowering small businesses.

• The City of Cape Town

• The City of Cape Town was perceived as being biased in favour of large, white-owned companies.
• SMMEs were limited to projects under R30 000 on the grounds that they did not have the experience, resources or finances required to carry out larger projects – an argument rejected by the presenters.

• The South African National Defence Force (SANDF) and South African Navy

• The SANDF requires the completion of long, complicated tender forms which most SMMEs and PDIs find intimidating.
• As a result of the use of forms that are not user-friendly, many small businesses are reluctant to tender for these projects.
• The Navy appears to be biased in favour of large commercial firms, against whom it is almost impossible for SMMEs to compete.
• There is also a perception that the Navy is biased in favour of companies whose owners are related to their employees.

• Metrorail

• Metrorail was perceived as being racist.
• They were also perceived as being hostile to SMMEs in that their rigid application of their rules did not enable contractors or their workers to make use of their facilities.
• Any infraction of the conditions of the tender resulted in the imposition of fines and/or a decrease in the number of trains the contractor was responsible for.
• There are unacceptable delays in the payment of contractors, resulting in their workers not being paid
• Finally, the ‘First World’ techniques used to call for tenders (e.g. advertising in newspapers or listing on the Internet), were criticised for preventing access by PDIs.

• Intersite

• Financial difficulties are experienced as a result of the fact that, although the work is based in Cape Town, the administration is carried out in Gauteng.
• The delays and extra costs this incurs results in additional costs and problems for SMMEs.

• Fronting

• BEE is not being implemented correctly. Some companies are exploiting their black employees in order to satisfy BEE criteria and thus secure contracts. However, this is usually a farce, as those employees are not shareholders, they are just being used.
• The national DPW should ensure that all tenders awarded by itself, as well as the regional departments, are based on genuine BEE criteria.

• Corruption

• Several instances of corruption have been experienced by SMMEs in Cape Town, but when attempts have been made to complain or to challenge tenders, no action has been taken against the officials deemed responsible.

• Registration

• The national DPW has begun a process of registration of contractors. However, registration is also required by other bodies, such as that regulating homebuilders, and is thus an expensive process.

The presentation by the representatives of the Council for the Built Environment (CBE) noted the following:

• The CBE is a very recently constituted organisation.
• Although established by an Act of Parliament (Act 43 of 2000), the CBE’s Council was appointed only in March 2002, with the first meeting being held in May of that year.
• The six statutory bodies for the built environment are:

• Engineering Council of South Africa
• South African Council for the Architectural Profession
• South African Council for the Quantity Surveying Profession
• South African Council for the Property Valuers Profession
• South African Council for the Landscape Architectural Profession
• South African Council for the Project and Construction Management Professions

• Vision

• Sustainable built environment professions, serving public and national interests.

• Mission

• Through good governance of the built environment professions, facilitate integrated development, whilst promoting efficiency and effectiveness.

• Role and functions

• To serve as a forum where the built environment professions can interact and address matters of mutual interest.
• To advise government on issues affecting the built environment.
• To provide advice and consultation to government on aspects of national policy that could impact on the built environment.
• To facilitate inter-ministerial co-operation on built environmental issues.
• To advise on human resource development in the built environment professions.
• To ensure that councils apply policy consistently on matters concerning their professions.
• To act as an appeal body for professions and aggrieved members of the public.

• Constraints and Challenges

• As a fairly new organisation, the CBE is not well known.
• The CBE is a unique organisation and hence is not able to draw upon the experiences of similar organisations globally – consequently the CBE is engaged in a Strategic Planning phase.
• The organisation lacks sufficient resources, particularly funding.
• There is a lack of appropriately qualified staff.
• There is a lack of office accommodation – the Council currently rents space in the building of the Construction Industry Development Board.
• There is a lack of public awareness of the work of the CBE.
• The recruitment of students into the built environment professions is a slow process for a number of reasons - as a result, these are ageing professions with a low intake of new students (particularly from historically disadvantaged communities).
• These last two challenges constitute serious problems as they have the potential to impact negatively on housing delivery in the future.

• Countries such as Brazil, India, Ghana and the islands of the Caribbean have well established built environment professions, whose experts ply their skills at a global level.
• South Africa can certainly learn a lot from these countries – this is one of the issues that the CBE will be expecting its Research Manager to address.

• Ageing of the built environment professions

• The CBE is working to address this problem by interacting with academic institutions and statutory higher education statutory bodies.
• Marketing of these professions among students and graduates is also under way.
• The CBE is also working on the provision of bursaries to disadvantaged students in order to encourage more black students to enter the professions.
• Much of the problem, however, lies in the low numbers of secondary school students who study mathematics, as well as the poor quality of the passes in that subject.

• Lack of resources

• This is a serious problem as it impacts negatively on the efforts of the CBE to establish itself as a properly functioning organisation.
• However, the CBE will be holding discussions soon with the NDPW to iron out these problems.
• The low number of students taking mathematics at Grade 12 level and the poor quality of the passes at this level acts as a barrier to higher education as many students cannot meet the entrance criteria of technikons and universities.

• Current Annual Report

• This is late due to the fact that the CBE did not have permanent staff and this impacted upon the production of the report.
• In addition, the production of this report depends upon the prompt receipt of reports from the various Councils – this is a stumbling block that the CBE is trying to address.
• The Annual Report is presently in draft form.

• Recommendations

1. Senior national and provincial Public Works officials from all nine provinces should meet with the Portfolio Committee in order to provide answers to the specific problems raised in this public hearing.
2. In future, full representation from national and provincial Public Works departments should be ensured at all meetings of this nature.
3. Statistics on the number of PDIs awarded tenders in ‘problem areas’ such as the Western Cape, over a specific period should be provided in order to provide a measure of the progress made in the advancement of BEE.
4. The national and regional Departments should deal with the specific charges of racism and corruption (supported by documentation provided at the public hearing by representatives from the small business sector) raised during this hearing, and resolve them.
5. Companies should be required to provide training, internships and/or bursaries to students from historically disadvantaged communities as part of the BEE criteria.