A new agreement between the South African government and six major construction companies signals a new era of peace between the government and the beleaguered construction industry.
Each of the six will contribute R1.25 billion over the next twelve years and the money will be used to fund socio-economic development in South Africa.
The new agreement also contains measures designed to promote trust between industry and the government. The construction industry took a severe hammering after widespread allegations of collusion. Following an investigation by the Competition Tribunal in 2013, the companies involved were collectively fined R1.4 billion.
With negotiations over and an agreement in place, the construction industry can now begin to move on from the scandal. Money placed in the fund will be managed by representatives from the construction industry in association with the government, and the fund will be administered by a separate entity.
The money will be used to support young engineers and trainee artisans from disadvantaged backgrounds, support the teaching of STEM subjects at public schools, and promote construction companies run by black people. New appointments will be made to provide expert advice to the government and help them deliver major public infrastructure projects.
The construction companies have agreed to implement changes within the industry, which will include allowing blacks to own a minimum 40% equity stake in each company or to embark on mentoring programs of black-owned companies. If successful, the new ‘partnership model’ will enable black-owned and -managed construction companies to enjoy a combined turnover of R9 billion per annum within a few years.
