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29 November 2005

Programme Director,
Ministers present here today
Representatives of the European Union Commission
Representatives of the SADC Secretariat
Senior Government Officials
Distinguished Guests
Ladies and Gentlemen

I am honoured to welcome to this historic occasion, the partners who combined to make this event a reality. I am especially pleased that so many of our international partners could join us here today. I am also very glad that we have among us distinguished politicians, government officials and business partners who are an integral part of the global pool of brainpower without which this initiative would never have been born.

To you all, on behalf of our government and people, I am privileged to extend a very warm welcome to this conference organised officially to look at how we create an enabling environment for partnerships in the building material and construction sectors. This is a very exciting time for the construction sector. It is exciting because, after such a long time the sector is showing concrete prospects for prosperity. The industry is currently doing much better now than in the past. We are experiencing and expecting a boom in this sector within the next five years. We estimate that in South Africa the construction industry contributes at least US$7 billion per annum. In this regard our government is increasing spend on infrastructure going forward in order to meet the challenges of the 2010 Soccer World Cup but also to address backlogs in rail, electricity and housing among others.

We said in report on the status of the industry last year that increased investment in infrastructure posed a few challenges to the construction sector. The construction industry remains the third largest employer in South Africa. It provides work to over 500 000 people. It will therefore potentially need to double its output over the next 10 years to meet investment demand. The conditions are therefore right. The market forces are on our side. The onus is now upon us to rise to the challenge and meet the delivery requirements. We, as a sector, can not fail the Southern African economy.

It is indeed appropriate that the theme for this conference centres on the celebration of construction opportunities, growth and development, and the creation of partnerships for the development of the regional construction sector. We must make sure that the benefits of these opportunities trickle down and are enjoyed by the wider society and Southern African Development Community (SADC).

I must caution, however, that it would be premature of us to start celebrating these opportunities now before we have made sure that we have created an enabling environment and laid a solid framework that would see these opportunities translated into real and concrete outcomes.

Challenges facing the construction sector

There are a number of challenges facing the construction sector. These, if not dealt with properly and with urgency, will forever impede the development of the regional construction sector and reconstruction in the SADC.

Skills shortage

It has become very apparent that the region does not have the sufficient skills base to meet the demands of infrastructure delivery. This of course varies from country to country. In some cases the shortage of skills relates to numbers and in other cases it relates to the shortage of capacity. This is a challenge that was foreseen as far back as 2000. However, as the sector we did not pull our socks high enough to strategise on how we would deal with this challenge and start planning for the future. It has become clear to us that accelerated delivery of infrastructure is driven by increasing levels of investment but is impeded by our own inadequate delivery systems and capacity.

South Africa alone does not have sufficient capacity to deliver on all the projects that are being planned and implemented currently. Economic infrastructure drives a country’s industrial, commercial and technological base and will contribute to issues such as improved competitiveness and the overall well-being of the population. Quite often there is a tendency to look overseas for this capacity without looking at our neighbours across the borders. In as much as there is a lot to benefit by importing skills from Asia, Europe, and Americas, this must not be done to the detriment of our region. Charity begins at home!

There are severe consequences resulting from the eroded skills base. For example, the cost of construction has increased exponentially during the past few years. It is likely to continue doing so unless a deliberate effort is made to enhance the sector’s skills base. Already we see the construction cost spiralling and surpassing inflation rates. It requires both government and the private sector to combine forces in tackling this pandemic. My department recently had to stop the construction of four major projects for Correctional Services because of the cost escalation. This is a situation we can not allow to continue. We must make sure that our skills base – from professionals to contractors to artisans – is enhanced.

It goes without say that any partnerships forged through this initiative must pay a particular focus on skills development. We, as a region, can benefit tremendously from the European community.

Developmental Agenda

Given the context of our regional and continental construction sector, it goes without say that we need to develop a shared vision for the sector. We need to ensure that whatever initiatives we get involved in promote the development of the regional construction sector. If we forget that, we would be shooting ourselves in the foot. I want to urge you all that as you deliberate and forge partnerships in these next days, you keep in mind that any initiative and partnership has to contribute to the developmental agenda of the regional construction sector. The developmental agenda encompasses a number of aspects. These are skills development, skills transfer; empowerment of local communities, local contractors and local professionals; a contribution to local economic development and the development and growth of the sector.

Regulatory and Policy Framework

One of the challenges facing our regional sector is the lack of a regulatory framework that guides and provides a framework for what happens in the sector. Each SADC member state has its own regulatory framework which in some cases frustrates service delivery or is ignored by development agencies that provide financial and developmental assistance in that particular country. Instead of discarding what exists, we need you to assist in developing the framework to ensure that it works for the sector and for the country.

I understand and acknowledge that most of our member states are desperate for the developmental aid they get especially in the context of a shortage of financial resources and the urgent need to deliver on infrastructure. I, however, want to emphasise that such development aid must be structured and received in a manner that does not just look at the product or service delivered. It must take into consideration the development, economical and social needs of the recipient country.

Procurement Reform

There is an urgent need for the SADC construction sector to put in place mechanisms that will encourage procurement reform. This would include the standardisation of processes – while respecting each country’s legislative framework. This will allow the regional construction sector to lay a foundation for uniformity of standards and processes. It will also remove the complexities attached to procurement processes.

We must make sure that our local communities, our people and our economy benefits from any partnership, investment, and any other initiative designed to contribute to reconstruction in the African continent and the development of the African construction sector.

As SADC ministries involved in the construction sector, we must also ensure that we make a deliberate effort to create an enabling environment that encourages partnerships to be forged. For instance, we must develop a shared vision that will portray a uniform approach to the development of our sector. We also need to engage with Ministers in other relevant sectors to ensure that their policies and legislative framework does not in any way impede the development of our sector. For example, we must engage with our Finance Ministers to talk about the issue of tax, with the Trade and Industry Ministers to discuss issues related to trade and investment. If we do not synergise our strategies, we will find ourselves faced with the challenges of trying to develop the economy while at the same time having our hands tied due to lack of an enabling environment.

My Department has initiated a process to establish a Forum of Ministries of Public Works in the SADC region. The main purpose for this Forum is to establish a platform where we could develop a common approach to the construction industry’s development, transformation and growth. We are planning to convene the first conference of the Forum in February 2006. I hope this demonstrates the will and commitment by Government to ensure development of our sector. I am sure I speak on behalf of my colleagues that the private sector is not very far behind us in this commitment and that you, as the European community, as well as other role players will partner with Government in this endeavour.

Conclusion

In conclusion, Ladies and Gentlemen, I want to encourage you to forge forward with this initiative and to support the SADC construction sector as it endeavours to regroup and develop itself. However, I must stress that we are making a collective effort as a SADC government to ensure that the developmental agenda, empowerment agenda, skills development agenda and transformation agenda are not undermined.

I wish you luck in your deliberations and hope you will share the outcomes of this conference at our conference in February next year.

Issued by: Department of Public Works
29 November 2005