R/€ = 13.48
R/$ = 11.46
Au 1228.13 $/oz
Pt 1231.50 $/oz
Mar 14, 2003
Construction firm makes BEE a priority for 2003Back
Alpha|Construction|Africa|Cement|Grinaker|Projects|Africa|South Africa|Construction Group|Gross Domestic Product|Product|Carl Grim|Howard Jones|Infrastructure|Thabo Mbeki|Trevor Manual|Middle East
© Reuse this South African construction group Grinaker-LTA is optimistic about prospects for the construction sector in South Africa, but admits that black empowerment will be a key challenge, particularly if it hopes to win State contracts.
Finance Minister Trevor Manual announced a R105-billion, three-year, infrastructure expenditure drive during his 2003 Budget presentation, more than half of which would be directed towards the construction sector.
This is a big recovery for South Africa, which has been experiencing a construction investment slump for many years, mainly due to under-expenditure by government.
Indeed, construction expenditure as a percentage of gross domestic product has been bungling along at some 2% during the last decade, significantly off its high of around 7% experienced during the late 1970s early 1980s.
Government’s intention to spend has, therefore, been welcomed by industry observers, but they have also cautioned that it would be key that government spends the money and it does not roll over.
This up-tick in the South African economy is also coming as vital relief for the local construction sector, which is facing uncertainty in the international markets, particularly in the Middle East, where South Africans have taken up a strong position. This is doubly important in light of the strengthening rand, which is likely to dampen its earnings from Africa and abroad.
However, it was also made clear during President Thabo Mbeki’s State of the Nation address that businesses hoping to win work from government would need to demonstrate a commitment to black economic empowerment (BEE).
Speaking earlier this week, Grinaker-LTA deputy chief executive Howard Jones revealed that empowerment would be a key priority for the company in the year ahead, adding that it would be pursuing various BEE initiatives.
This sentiment was supported by the head of Grinaker-LTA’s holding company, Aveng, who said that it would be pursuing ownership, employment equity, procurement and corporate social investment programmes to improve its BEE profile.
Carl Grim says the company will also be seeking to maintain a well-balanced construction order book, locally and internationally and that it would be happy to allow its order book to fall if that improves quality of work on hand. Indeed, the company had already seen its order book fall from R9,8-billion in June 2002 to R8,2-billion in December, with Grim explaining that this was due to managed programme of ensuring that the order book remained of a quality acceptable to the company’s risk framework.
The improvement in the construction sector is also evident in Aveng’s cement business Alpha, South Africa’s second largest cement producer, with its tonnages for the six-month period to December 2002 rising 9,9% on the previous period.
Aveng describes the cement market as buoyant, reporting 5% growth last year.
The cement business is also beginning to raise its output and is currently running at 60% capacity, which could improve as its efficiency projects involving R340-million begin to kick in.
Grim added that BEE was likely to be a big challenge, but that Aveng was committed to making it work in the interests of both social equity and its shareholders.
It is also understood that the construction sector as a whole is considering the establishment of a BEE charter, although it is likely to hold back on this until the Department of Trade and Industry (DTI) publicises a broad-based piece of legislation, giving guidance to South African business on the issue of empowerment.
Edited by: Terence Creamer© Reuse this Comment Guidelines (150 word limit)
Other Construction News
US-based beverage producer Pepsi this month set up operations, with about 300 employees, at a new R70-million high-tech, custom-built headquarters at OR Tambo International Airport’s Aerotropolis precinct in Johannesburg. Pepsi, through its South African company...
Updated 1 hour 14 minutes ago Tanzania's Energy and Minerals Minister Sospeter Muhongo resigned on Saturday amid a graft scandal that has rocked the gas-rich country and led Western donors to delay aid, though he called himself "incorruptible" and denied wrongdoing. Muhongo became the third...
Updated 1 hour 22 minutes ago Madagascar will not achieve the 5% growth the International Monetary Fund has projected for it this year unless it introduces reforms to boost tax revenue and improve the business climate, an IMF official told Reuters. The Fund said earlier this week that the economy...
Updated 2 hours 18 minutes ago Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Recent Research Reports
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
This Week's Magazine
Three-dimensional (3D) printers being sold in South Africa by electronics distributor Rectron currently print in two types of plastic, but have a clear upgrade path over the next five years to eventually print in wood, ceramics and metal-alloy materials, says Rectron...
The world’s two dominant commercial aircraft manufacturers, Airbus of Europe and Boeing of the US, both recently announced that they had made record aircraft deliveries in 2014. Boeing set a global record for the industry with 723 commercial aircraft delivered, while...
The Western Cape is shifting further into the renewable-energy space with the official opening of a factory specialising in solar inverters, a key component of solar photovoltaic (PV) plants. The investment in the manufacturing facility in Cape Town aims to boost the...
Business Leadership South Africa (BLSA) last month welcomed Cabinet’s establishment of a technical team war room to undertake various interventions to improve electricity supply security over the short- and medium-term, but added that the private sector also had a...
Despite a rapid rise in mobile connections and the economic and social benefits of such connectivity, more than half of the world ended 2014 unconnected. For this reason, industry commentators believe the biggest impact of mobile technology is still to come –...