The Role of the Engineering Profession in the Implementation of the National Development Plan: Keynote address at the South African Forum of Civil Engineering Contractors (SAFCEC) Conference delivered by Hon. Jeff Radebe, MP: Minister in the Presidency for Planning, Monitoring and Evaluation and Chairperson of the National Planning Commission, Bay Hotel, in Cape Town
Programme Director
MEC for Transport and Public Works, Hon. Donald Grant
SAFCEC President, Mr Thembinkosi Nzimande
Members of the SAFCEC Council
Chief Executive Officer of SAFCEC, Mr Webster Mfebe
Distinguished Guests
Ladies and gentlemen
Thank you for the invitation to address you today. Your conference takes place on the World Day for Decent Work; a day when workers across the globe mobilise for decent work. As an employer body, I have no doubt that decent work is what you desire for your workers. I invite you to join me in paying tribute to all the workers of our beloved country.
I am delighted to address you as I believe you have an important role to play in the implementation of the National Development Plan (NDP) as an industry.
My optimism about the engineering sector and construction industry is not misplaced. The world is a monument to the great contribution of the engineering profession to the advancement of humanity. The dams and bridges, the railway lines and highways, the energy and telecommunication networks, the automobiles and speed trains, the ships that traverse our oceans and aeroplanes that move goods and people across spaces, all bear testimony to the greatness of the engineering profession.
From the Industrial Revolution that changed the world economy, to the internet which revolutionised how we communicate, and recently cloud computing, engineers have played a role. Engineering professionals are known for finding solutions to the most complex challenges facing the world.
Coming closer to home, I wish to pay tribute to your members in the construction sector for the positive role they played in developing the infrastructure that enabled South Africa to host a successful Soccer World Cup in 2010. You made those who doubted our ability to host such an event eat a humble pie. You helped us gain the respect of the world.
Ladies and gentlemen
Your profession has also contributed to the building of atomic bombs that caused untold misery. And, the very progress and civilisation we celebrate brought by the advancement in transportation, energy generation, and faster computing has come at a great cost to the environment.
During the preparations for the Soccer World Cup, many construction firms decided to engage in collusive and anti-competitive behaviour. We now know that the amount involved was roughly R47 billion, with over 300 private and public sector projects affected and more than 20 of our companies implicated. This was surely the darkest hour of this industry. The revelations generated anger among South Africans and dented the trust they had in your industry.
I am mentioning this so that we can embark on a serious process of rebuilding trust between this industry, government and the rest of society. I believe that our anger and disappointment should not allow this regrettable incident to detract from the great work that was done. We must accept that some unacceptable things were done, learn the lessons to prevent them from occurring again and move forward.
We have far too many challenges that require us to work together. We should build a strong and reputable industry and together build a country of our dreams; one we will be proud to leave behind for future generations.
Challenges facing the country
Our country faces a number of pressing challenges. Firstly, the South African economy is stagnating due to a variety of global factors. Besides the low global demand and significantly low commodity prices, the economy’s underperformance is also due to a range of domestic factors, such as decades of under-investment in economic infrastructure, the resulting energy and transport constraints, prolonged and often violent strike action, rising input prices, a volatile exchange rate, among others. While Gross Domestic Product (GDP) growth rate has averaged 3.7% in the past 10 years, annual growth averaged 1.5% in 2014.
Secondly, the structure of the South African economy limits the capacity of the economy to grow. The NDP’s diagnosis of the South African economy is that: South Africa displays features of a low-growth, middle-income trap, characterised by lack of competition, large numbers of work seekers who cannot enter the labour market, low savings (hence a reliance on foreign capital inflows) and a poor skills profile. Many of these features are rooted in the evolution of the economy over the past 150 years. The net effect is a high levels of unemployment and inequality, and low levels of investment.
The engineering sector needs to commit to greater levels of competition and training of employees to build a vibrant sector that is capable of employing large number of work-seekers and contribute to development objectives of the country.
Thirdly, the infrastructure bottlenecks that stifle the growth of the South African economy reflect poorly on the engineering sector of our country. It raises the uncomfortable question about what happened to the engineering capacity that built the world class infrastructure for the Soccer World Cup in 2010.
As a country, we went on to help Brazil with its preparations for Soccer World Cup 2014 but we seem to be incapable of building decent schools for our children. It is unacceptable that children fall into pit latrines in a country with so much capacity and resources.
Our energy projects are running behind schedule and the country has been plunged into darkness from time to time with devastating impact on the economy and people. Our water infrastructure is decaying in municipalities across the country.
Something is seriously wrong; we must identify the problem, and take the necessary steps to fix it.
Fourthly, everyone in our country, irrespective of sector should be concerned about the high level of income inequality. We have the dubious honour of holding the title of being most unequal country in the world. Inequality is the internal enemy that is tearing our society apart.
To illustrate, during the 13th Nelson Mandela Annual Lecture, Professor Thomas Piketty estimated “that the share of total income going to the top 10% income earners in South Africa […] is between 60 and 65%...” compared with 50 – 55% in Brazil, 40 – 45% in the United States of America, 30 – 35% in most European countries. This high level of income inequality undermines all the good work done since 1994.
In their book, The Spirit Level, Richard Wilkinson and Kate Pickett conclude that inequality is bad for everyone. They show that countries with high inequality tend to perform poorly on many development indicators such as mental health problems and drug abuse; physical health and life expectancy; poor educational outcomes; teenage births; violence and stifles social mobility.
Titled “Equity and Development”, the World Development Report of 2006 concluded that: Inequality of opportunity, both within and among nations, sustains extreme deprivation, results in wasted human potential and often weakens prospects for overall prosperity and economic growth.
Inequality is also bad because it makes those at the bottom of the income distribution, especially workers, who toil under dangerous conditions feel cheated. It generates resentment of the type that we are seeing in our country at the moment.
The Chief Economist of the World Bank at the time, François Bourguignon remarked at launch of the World Development Report 2006 that: Equity is complementary to the pursuit of long-term prosperity. Greater equity is doubly good for poverty reduction. It tends to favour sustained overall development, and it delivers increased opportunities to the poorest groups in a society.
The message is clear: it is impossible for anyone to be committed to the growth and development of this country, including the reduction of poverty and not care about inequality. This challenges us to have a frank discussion about what needs to be done to address inequality.
It is easy to blame the government for the poor performance of the economy, but addressing inequality requires all of us to agree on a set of measures to help the economy over this hump.
Opportunities for the engineering sector and construction industry
The NDP provides us with the tools to tackle these persisting challenges. It paints a picture of a country we want to live in by 2030; and outlines the actions and measures we need to take to achieve our vision. It outlines the physical, human and institutional capabilities necessary to ensure socio-economic transformation; it highlights the importance of clarifying roles and responsibilities of different actors.
It is important to note that the NDP is not a plan of government or the ruling party, but a plan for South Africa that is inclusive of all sections of society, in which the state has a specific role relative to the roles of others. It recognises that we are stronger and more successful when we work together.
Of relevance to SAFCEC and your members, is the strategy for economic growth and development outlined in the NDP and embodied in the key actions it identifies, such as:
- boosting our educational levels;
- promoting industries that are labour absorbing such as mining, agriculture, construction, hospitality and small businesses;
- growing the more advanced sectors of the economy such as manufacturing, parts of financial services, telecommunications and businesses services; and
- the effective provision of a broader social wage to enable the poorest of our people to have a decent standard of living, to build the capabilities to get better jobs, higher incomes and a broader range of benefits.
The NDP recommends that:
South Africa needs to invest in a strong network of economic infrastructure designed to support the country’s medium and long-term economic and social objectives. This economic infrastructure is a precondition for providing basic services such as electricity, water, sanitation, telecommunications and public transport, and it needs to be robust and extensive enough to meet industrial, commercial and households needs.
Many of the recommendations are currently being implemented as part of the Medium Term Strategic Framework (MTSF) 2014 – 2019 which is our five year plan of implementing the NDP.
Transport infrastructure
In the transport sector, the NDP identifies the need to increase investment in public transport and resolve existing public-transport policy issues; devolve transport management to local government; improve road infrastructure; expand and improve the Durban-Gauteng corridor; expand and improve the coal transport corridors to link the Waterberg coalfields in Limpopo to domestic power generating plants and to export facilities in Richard’s Bay.
Energy infrastructure
In the energy sector, the NDP recommends investing in a new heavy-haul rail corridor to the Waterberg coal field; upgrading the central basin coal network and expand export capacity line to Richards Bay; incorporating a greater share of gas in the energy mix, both through importing liquefied natural gas and if reserves prove commercial, using shale gas; developing infrastructure for the import of liquefied natural gas, mainly for power production, over the short to medium term; and moving to less carbon-intensive electricity production through procuring at least 20 000MW of renewable energy, increased hydro-imports from the region and increased demand-side measures, including solar water heating.
Water infrastructure
In the water sector the NDP recommends speedy implementation of the Lesotho Highlands Project Phase 2, to supply the Vaal system; undertaking the Western Cape water re-use and groundwater projects, which are to be completed by 2017; and expanding the regional water infrastructure investments and bulk-water supply programmes, with clear implementation targets;
Information and communication infrastructure
In the information and communication technology sector the NDP highlights the need to establish a national, regional and municipal fibre-optic network to provide the backbone for broadband access; driven by private investment, complemented by public funds required to meet social objectives.
Rail Rolling-Stock Manufacturing
Earlier this year, the 24th Ordinary Session of the African Union held in Addis Ababa, Ethiopia adopted a resolution mandating South Africa to champion “the manufacturing of rail rolling-stock to support the deepened drive towards industrialisation” in Africa. This decision is very important for the engineering sector in South Africa.
North-South Road and Rail Corridor
As part of the African Union Presidential Infrastructure Championing Initiative (PICI), to accelerate and deepen regional integration, South Africa is leading the implementation of infrastructure projects which form part of the North-South Road and Rail Corridor. Some of the projects include: the Dar-es Salaam Port, Berths 1 to 7 and Bulk Terminal in Tanzania; Durban Dig-Out Port in South Africa; Serenje to Nakonde Road in Zambia; Chirundu to Harare Highway in Zimbabwe; Harare to Beit Bridge Highway in Zimbabwe; Kazungulu to Pandamatenga to Nata Road in Botswana; National Railways of Zimbabwe; Lusaka to Chirundu Link 4 in Zambia, and Kafue to Livingston Road in Zambia.
Implementing the NDP: Initial Actions by Government
As Government, we have accepted that we have a leading role to play in the implementation of the NDP. In this regard, Government, through a decision of Cabinet after the elections of 2014, decided that the current Medium Term Strategic Framework (MTSF) for 2014 – 2019, will constitute the first five year implementation plan of the NDP.
The Framework focuses on 14 Developmental Outcomes that mirror the 14 thematic areas of the NDP. Various proposals and commitments of the NDP have been incorporated into the plans and targets of respective Departments and State-owned Companies and other public entities, including at the Provincial and Local level.
Cabinet utilises the MTSF as the basis for monitoring the implementation of the NDP across government, and considers progress reports for each of the Outcomes on a quarterly basis. These progress reports on are made public through the Programme of Action (POA) website managed by the Department of Planning, Monitoring and Evaluation.
In this way, accountability has been enhanced in Government. Also, the President has signed performance agreements with all Cabinet ministers that set out what each minister is expected to deliver. This is in addition to the established practice of concluding performance agreements with directors-general and other senior managers in the public service. The President also meets with ministers periodically to review performance against the signed performance agreements.
Ladies and gentlemen
I listed the broad areas of infrastructure investment and projects identified in the NDP to demonstrate that we are not short of work in this country. I further highlighted opportunities that are available on the continent which our companies should be able to take advantage of. I also highlighted the initial actions that Government has initiated to implement the NDP.
Given the investments recommended in the NDP this country should be one big construction site. The fact that we are not seeing the level of construction activity that we would expect is cause for concern for us in Government.
It is clear that there is misalignment between our policy intentions, the legislative and other instruments in place and the plans of the industry. We should engage in dialogue to identify the areas where there are gaps and misalignment.
Conclusion
In conclusion, I believe that we need to agree on a common vision for the engineering sector and construction industry in the post-apartheid era, find common language to articulate the challenges that are holding us back, identify common objectives, put together a common strategy and get down to work.
This is what we do in Operation Phakisa planning sessions. Representatives of various sectors spend time together analysing problems and finding solutions as well as identifying actions to be taken, and assigning roles and responsibilities.
We have now successfully introduced Operation Phakisa in the Oceans Economy, and in the Health and Education sectors, the latter which was launched by the President last Friday. We are in the process introducing this methodology in the Mining sector.
Let us work together to build the country of our dreams as envisaged in the NDP Vision 2030.
I wish you well on your deliberations for the rest of the conference.
I thank you.
