1. Thabo Masombuka Chief Executive Officer (CE0) CSCC TRANSFORMATION TRENDS IN THE CONSTRUCTION SECTOR 13 August 2014

2. WHY ECONOMIC TRANSFORMATION & BBBEE

3. BBBEE AS AN INSTRUMENT FOR ECONOMIC EMPOWERMENT BBBEE PROPERLY DEFINED “An integrated and coherent socio-economic process….which aims to redress past imbalances by transferring and conferring ownership, management and control of South Africa’s financial and economic resources to the majority of its citizens and ensure broader participation of black people in the economy in order to achieve sustainable development and prosperity” – BBBEE Strategy document

4. THE GAZETTING OF THE CONSTRUCTION SECTOR CODE (CSC) The BBBEE STRATEGY & CODES promotes PARTNERSHIP & INDUSTRY EFFORTS to foster economic transformation objectives. Hence the Construction Sector Code was gazetted in June 2009 to achieve the following strategic objectives : The inclusion of BLACK PEOPLE in general and BLACK WOMEN in the OWNERSHIP and MANAGEMENT of construction companies and businesses. The acceleration of TECHNICAL SKILLS and CAPACITY OF BLACK YOUTH and PEOPLE WITH DISABILITY. To provide JOBS and EMPLOYMENT OPPORTUNITIES. Building the ENTREPENEURIAL CAPACITY and SUSTAINABILITY of BLACK enterprises in the construction sector.

5. THE ROLE OF THE CSCC The CSCC is the EXECUTIVE AUTHORITY : Entrusted with OVERSEEING and MONITORING the IMPLEMENTATION of the Construction Sector Codes (CSC) of Good Practice by the Industry. Through industry programmes & initiatives, responsible for the FACILITATION of sector empowerment TARGETS. The ALIGNMENT of Construction Sector Code with existing legislation Provide necessary GUIDANCE & BEST PRACTICE NOTES on the interpretation of the principles of the Construction Sector Code. LIAISON with and reporting to the regulatory stakeholders on the annual measurement of the construction sector code - BBBEE Advisory, DPW and the DTI. Creation of RELIABLE and ACCURATE industry specific empowerment data

6. RATIONAL FOR THE BASELINE REPORT AND KEY FINDINGS

7. BASELINE METHODOLOGY In 2013, the CSCC initiated a baseline study to ascertain the state of transformation & empowerment in the Construction Sector. The CSCC actively pursued the submission of industry BBBEE verified scorecards within the construction sector, including Contractors and BEPs. Over 1770 (about 14% of the sample) of the 13500 commercially active companies were scoped. This actively included the interpretation of 3530 BBBEE certificates

8. OVERVIEW: INDUSTRY TRANSFORMATION: ALL SECTORS Upward Trend: 64% in 2009 to 85% in 2013 Level 4 and above

9. OVERVIEW: INDUSTRY TRANSFORMATION: EME S High Contributor to overall Industry Transformation above Level 4: 55% contribution in 2009 and 45% in 2013

10. OVERVIEW: INDUSTRY TRANSFORMATION: LARGE ENTERPRISES Upward Trend: 38% in 2009 to 65% in 2013 Level 4 and above (60% in 2012)

11. TRANSFORMATION TRENDS: LARGE CONTRACTORS

12. PUBLIC SECTOR ENFORCEMENT OF BBBEE

13. ENFORCEMENT OF SECTOR CODES The gazette of sector codes in terms of Section 9 (1) of the BBBEE Act means: Although industry Sector Codes have CSC has the same status as the generic CoGP – They take MANDATORY precedence in the measurement is of sectors. This means that the CSC is LEGAL & BINDING on all construction industry related business activities : Both PUBLIC & PRIVATE. Since Section 10 of the BBBEE Act makes it mandatory for the state, its organs and Public institutions to take into account BBBEE when : Granting licenses to engage in a specific regulated economic activity, for example, gambling or mining, Granting concession to a private enterprise to operate an asset or enterprise on behalf of the state, Selling an asset or a state-owned enterprise, Entering into a public-private partnership, Engaging in any economic activity.

14. CSCC MEASURES TO ENFORCE THE CONSTRUCTION SECTOR CODE Drawing from the BASELINE REPORT, the CSCC has initiated the following : 1.Initiatives to correct and ensure the validity of industry issued BBBEE certificates & scorecards. 2.Ensure the correctness of measurement through interpretation & guidance notes on the peculiar areas of the construction sector code. 3.Amendment of regulations in the CIDB registrar of contractors for requirements of BBBEE scorecards for new registrations and renewals.

15. IMPLICATIONS FOR NON- COMPLIANCE WITH THE CSC Amended BBBEE Act requires every organ of state, public entity or department to take into account, as far as reasonably possible, application of the BBBEE codes, when performing certain functions. The BBBEE Amendment Act now makes MANDATORY provisions for compliance. This means that PROCUREMENT AND SUPPLY CHAIN performing functions, including awarding of contracts and consideration of bids must ; Consider PPPFA regulations - Requires applicants & bidders to submit their BBBEE certificates issued in terms of the sector specific scorecards. Insist on a DETAILED PLAN OF COMMITMENT of the bidders demonstrating measures to address priorities set out in the sector code, viz CSC. Take vigilant note of possible acts of BBBEE fronting or circumvention by bidders. Where such is detected, report such to the relevant executive authority and the construction sector charter council.

16. The CSCC is based at : 164 Katherine Drive Pinmill Farm Office Park Ground Floor – G Block Sandton, Johannesburg TEL : (011) 262 4644/5/6 www.cscc.org.za WHERE TO FIND US