Trust gives less to industry
CONSTRUCTION: SOCIAL PROGRAMMES GET MORE THAN TWICE OF R288M POT
A total of 15 companies received R68.63 million in loan support, says report.
Enterprise development programmes targeting black contractors were allocated less than a quarter of the funds committed to a trust established by government and seven listed construction companies between August 2017 and March 2021.
At just 23.8%, this allocation by the Tirisano Construction Fund (TCF) stands in stark contrast to the 51.36% – or just over R148 million of the total of R288.25 million – the fund allocated to social infrastructure programmes.
Almost 11% was allocated to the engineering bursary programme, about 9% to construction occupational development, and 5% to basic education.
Industry bodies, including Master Builders South Africa (MBSA) and the Black Business Council for the Built Environment (BBCBE), have questioned the allocations made by the fund and the paucity of benefits flowing to black contractors from the Voluntary Rebuilding Programme (VRP) settlement agreement.
The VRP agreement settled any civil claims for damages against the seven construction companies – Aveng, Basil Read, Group Five, Murray & Roberts, Raubex, Stefanutti Stocks and WBHO – from government and state-owned entities arising from admissions of collusion and bid-rigging in their settlement agreements with the Competition Commission.
Each of the seven companies agreed to contribute R1.25 billion over 12 years to the fund and to undertake further transformation initiatives, including mentoring up to three emerging black-owned contractors. (Basil Read and Group Five are both in business rescue while Aveng and Murray & Roberts have sold their South African construction businesses to black contractors.)
The enterprise development programme aims to upgrade construction companies owned and managed by black people, and help to build capacity and sustainability through direct assistance for emerging contractors.
The stated objectives of the TCF are to promote the development and enhancement of the construction industry, and promote social infrastructure for all South Africans.
The social infrastructure project allocations include:
R7.65 million for construction of the Maserunyane Secondary School in Limpopo;
R14.75 million for facilities at the Nelson Mandela Children’s Hospital;
R60 million for a Safe Ablutions for Education (SAFE) project involving 15 Department of Basic Education sites; and
R33 million to a Municipal Boreholes Programme that will benefit 11 municipalities in four provinces.
An industry association executive who did not want to be named said the TCF was not established to supplement the budgets of national and provincial departments and municipalities.
The fund was established in August 2017 – and beneficiaries of the enterprise development programme were selected and contracted for the first time in its 2020/21 financial year.
A total of 15 companies received R68.63 million in loan support, according to the TCF’s annual report for the year to endMarch 2021, its most recent.
The BBCBE last month voiced its extreme unhappiness about how the settlement agreement has been implemented, with its president Danny Masimene saying the council wants to re-engage government about the agreement as black-owned construction companies have not benefitted from it.
Masimene also demanded that the seven JSE-listed companies that are signatories to the settlement agreement be blacklisted by National Treasury and deregistered by the Construction Industry Development Board (CIDB).
He said the BBCBE has also withdrawn its representative from the TCF.
MBSA executive director Roy Mnisi voiced the same concerns last month, saying MBSA has emerging contractors as members and believes they should be benefitting from the VRP.