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The unintended consequences of transformation

Unrealistic expectations cannot be met.
SMMEs should be looking at transport, logistics, energy and low-cost housing. That’s where the state’s money is going and where the best opportunities lie, the author writes. Picture: Shutterstock

Transformation brings with it unintended consequences. That is not a reason to abandon the process, but one to absorb what is happening, take it on board and make the necessary adaptations to keep the end-goal in mind.

So it is with the thrust from the South African National Roads Agency (Sanral) to transform the construction industry in South Africa.

Our transformation programme is in line with the National Development Plan (NDP) and has a significant effect on the construction industry. After all, Treasury allocated some R800 billion of the national spend on infrastructure across all three spheres of government. And Sanral will be spending a good 5% of that amount – enough, in other words, to be felt in the industry.

More is needed, though. For transformation to succeed, all of the R800 billion has to be effectively employed in the process. But it also means that the beneficiaries of the transformation process should broaden their quest to access the infrastructure industry.

Because Sanral is leading the pack, one of the unintended consequences has been unrealistic expectations from possible future beneficiaries of the transformation process. It is important to note, and emphatically, that transformation is a process. It is not an event, a once-off, something you just do and it is done.

It takes time, has to be done sequentially, has to be done correctly – true, the end-result of a more equal and just situation must constantly be kept in mind and every step must be in that direction.

Yet Sanral simply cannot accommodate all the SMMEs in a particular community where it may be building, maintaining or upgrading a road. There is not that much work to go around and the main contractors only have the capacity to take on a predetermined number of SMMEs.

After all, the process also includes the need to upgrade the business and engineering skills of these SMMEs and assist in the training of their labourers in a variety of jobs in road construction.

The roads agency’s vision of the future, Horizon 2030, includes an undertaking that 30% of a major contract has to go to SMMEs, preferably to black- and women-owned companies. But just being black- or woman-owned is only the beginning: there also has to be capacity, a sense of responsibility to doing the job and doing it properly.

There is no way that every black SMME can be accommodated. Only those who make the grade will become part of the 30%. Just arriving at a construction site and demanding work, is threatening and unacceptable. It will not result in a contract.

Read: Treasury, Sanral and the construction mafia

But there is also a need for prospective beneficiaries of transformation to look beyond Sanral. The roads agency is an obvious “target” for those who want to enhance their life opportunities – after all, one can hardly miss a construction activity on or near a road. So, it is understandable that is where hopeful candidates would flock to.

Yet there is so much more that can be accessed. To quote Economic Development Minister Ebrahim Patel speaking in Davos at the World Economic Forum in the beginning of the year: South Africa has invested heavily in energy but the country still has a very significant infrastructure investment to make; in rail, with the commuter story; freight logistics to move minerals more quickly and water, which is made worse by the drought.

SMMEs should be looking at four sectors in particular where the present emphasis of the government is: transport, logistics, energy and low-cost housing. That’s where the state’s money is going, where the need is greatest and thus where the best opportunities are.

Add in sewage, communication in its broadest sense, plus the understanding that the funding can come from the government or private sector, or a combination of the two, known as public-private partnerships.

The fact is simply that whereas Sanral may be leading the transformation pack, the thrust of transformation takes in the whole economy. Those who legitimately and with ability are looking to enhance their life opportunities should look wider.

It will be better for them and the economy.

Vusi Mona is GM: Communications at Sanral.

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Spin it whichever way you want, the mafia is coming for you. You allowed it once, accepting it as a new standard.

It would be interesting to know what the cost of this “transformation” is. Considering that “black” tenderers can obtain premiums of up to 10% or 20% dependent upon project value this alone is significant. Now add the number of inadequate contractors appointed who were paid but could not perform, necessitating another appointment and set of payments.

Add these costs to etolls and we could have another Eskom / SAA etc.

If, you set a goal, then take more than twenty years to do it, and fail, it is reasonable to moderate some of the parameters, but to come back and say the expectations are unrealistic…is something. How long did it take to put people on the moon? C’mon people…we get excuse after excuse, after excuse! Enough already. Two decades should be more than enough, otherwise just shut the shop and stop lying to people. Or simply put: forget transformation, call for a revolution.

Transformation is an imposed business model, that is it is not driven by market forces. Communism was not driven by market forces, it failed, socialism is not driven by market forces, it has failed in many countries and will still fail in others, apartheid was not driven by market forces, if failed, BEE is not driven by market forces, it too will fail.

Vusi Mona is quite polite….unfortunately he will have to get political party leaders of a particular political party to convey his message for him if he wants to be heard. They don’t read Moneyweb!

End of comments.





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