Unfair competition - Black contractors want a piece of cake

 

This week, the Black Business Council Built Environment (BBCBE) met the Construction Industry Development Board (CIDB) to re-submit a proposal to overhaul the board's grading system.
The BBCBE argues that the regulations have been a greater impediment to the advancement of black contractors than any other measure.
In order to qualify for government's multibillion-rand "priority infrastructure development programme", companies must be rated between grade 8 and grade 9 on the CIDB system. This is the domain of established companies.
For a company to progress from G8 to G9, it must demonstrate a fourfold growth in capital assets.
At present the highest echelon of the grading system is comprehensively dominated by "white established contractors, to the exclusion of black contractors", explained Gregory Mofokeng, secretary of the BBCBE.
He says the CIDB was established under the stewardship of established contractors. Its purpose is to develop and regulate the industry.
CIDB chairman Bafana Ndwandwe says his organisation and the industry are hamstrung by bureaucracy within the department of public works, which is the custodian of government policy.
The BBCBE's concerns were raised in 2009 but no progress has been made.
"The department has been virtually dysfunctional administratively. We've had no less than seven DGs including acting ones, such as the current incumbent, in the past four years. We've changed three ministers in that short time," Ndwandwe says.
Since its inception though, its thrust has been on regulation "with the intended or unintended consequence of tightening the perimeter for participation, which was discriminatory towards black contractors, notably the emerging ones", Ndwandwe adds.
Mofokeng says it's impossible for black contractors to compete with the established companies because of their size.
"All the top five companies have an order book in excess of R10bn, amassed from both the private and public sectors," says Mofokeng.
He says the established companies operate in the private sector as "an exclusive white boys club".
He says whites own land, are the major developers, own the largest construction companies and do not contract work to black companies.
"White companies have healthy order books. They did not grow from nowhere. They were supported by the previous government. Now they are the prime beneficiaries of the new government," he says.
In a few months the Presidential Infrastructure Coordinating Commission is expected to announce a massive infrastructure development programme. Of the 17 priority projects, none is below R1bn. Mofokeng says that by virtue of the CIDB grading, this systemically excludes black contractors.
He cited the case of the Gauteng department of education's R5,5bn school renewal programme, which the government intends to break down into 10 clusters of approximately R500m each. If this goes ahead, there might be no black contractors who win any bid.
"This is absurd because the programme is made up of small projects such as building classes or renovating a school, which can be done by small companies.
"But under the government's plan, black contractors must sub-contract to established companies under unfavourable terms and conditions," Mofokeng say