Construction charter addresses industry inequalities
The draft Construction Sector Black Economic Empowerment (BEE) Charter sets out the industry's commitment "to actively promote a vibrant, transformed and competitive construction sector", according to a circulated summary of the charter by Durban law firm Shepstone & Wylie in their July Commercial Department Flyer.
The charter will be "applicable to all companies that are involved in the expansion, creation and/or maintenance of fixed assets related to residential or non-residential buildings, infrastructure, or any other form of construction works in South Africa".
The charter aims at establishing BEE principles applicable to the construction sector, how these should be implemented and the targets to be achieved in terms of a scorecard. It also provides a framework for the development of a Code of Good Practice within the construction sector.
The charter addresses the inequalities of ownership, control and management, which are inherent within the industry and which require immediate transformation.
The need to increase investment, together with expansion; fronting; budgets not being spent; the absence of adequate financial support for SMMEs; unacceptably low working conditions; non-compliance with labour; safety and health regulations; limited ownership and control by black people; lack of skills and ineffective partnerships between the private sector, government and other stakeholders are some of the more serious challenges currently facing the construction industry, which through the implementation of the charter, it intends to put an end to.
The charter will require companies to submit annual, independent, audited reports to a charter council (to be established) which must contain their companies' scorecards and progress reports on their BEE undertakings. The charter council will be responsible for overseeing the implementation of the charter as a whole and intends carrying out comprehensive reviews in 2011 and 2016 in this regard.
The charter aims at achieving changes in ownership and control in terms of race and gender. Ownership must be direct and broad based (to include black people in general, black women, black youth, disabled people or employee share ownerships).
For direct ownership to be attained there must be a transfer of shares, voting rights and economic interests. The ownership requirements will also extend to foreign-owned companies. Control must be at holding company board level, extending to black women in particular. The percentages and time frames within which ownership and control must be achieved have not yet been finalised.
Through the charter, the construction industry undertakes to focus on enterprise development and sustainability for micro and small businesses with the introduction of enterprise development programmes including; management, business development, skills and technology transfer programmes.
The industry further undertakes to invest in skills development programmes by introducing more training, career path development and mentorship programmes by spending over and above the skills development levy on direct training for black staff, black women and black youth.
The industry is committed to substantially increasing preferential procurement to BEE suppliers, in other words, only suppliers that have good BEE accreditations will be utilised.
The industry undertakes to allocate a percentage of its after tax operating profits to the development of corporate social investment projects, such as aids awareness, arts and culture, sport, health and environmental projects.
Lastly, it is important to note that only once a transformation charter has been published in the government gazette by the Minister for Trade and Industry will it be regarded as a transformation charter in terms of the Broad Based Black Economic Empowerment Act.