Johannesburg - Swaziland-based Inyatsi Construction Group Holdings believes the government needs to incentivise business to achieve real transformation.
Frans Pienaar, the chairman of Inyatsi, which has plans to seek a JSE listing, stressed that if the government wanted real transformation, it had to make it worthwhile for business to do it.
Pienaar said there were two reasons why transformation as it was currently being driven would not work: a big portion of organised business did not believe transformation was necessary and another did not believe the government had the right to demand transformation.
“Both of these (groups) are wrong, but what happens? They smile and nod at the cameras and do whatever the scorecard or thing government can dream up to try and force them into something and then work the system. But behind the scenes they get frustrated. That is why we do not see real transformation in business or in industry,” Pienaar said.
He admitted that it would take political courage to incentivise transformation, because it had never been done before.
He said it should take the form of paying contractors more, such as a set percentage, for contracts, provided they could prove and demonstrate that transformation had taken place while executing the contract.
Pienaar said this would mean the focus of contractors would be on transformation, because the more transformation they did, the more money they could make. “If you approach transformation in an innovative way that makes it worthwhile for everyone, the benefits will be significant in the terms of the spin-offs after that,” he said.
Grading
Pienaar said a small subcontractor with a Construction Industry Development Board (CIDB) 3 grading could improve its grading by the end of a two-year project to a CIDB 6 grading. If the contractor, for instance, had further projects and could also get incentive payment benefits on these, they were likely to use the subcontractor they knew, he said.
“So you are going to build long-term relationships with these entities and they are going to get bigger and bigger,” he said.
There were several companies in Swaziland that were owned by people who used to work for Inyatsi, Pienaar said. There were Inyatsi employees who wanted to start their own businesses and the group sold a construction machine to them and then hired it back from them under a contract and gave them subsequent contracts that helped these new companies to grow.
“Our single biggest competition in Swaziland is a company that started like that. The owner of the company was our commercial manager and we assisted him with his first project,” he said.
Pienaar believed government should provide contractors with a list of construction and infrastructure projects it wanted done, agree on the terms of reference for proposals to be submitted for each project and guarantee to repay companies the cost of compiling their proposals if the contract was not awarded.
He said contractors had the capacity to do the preparatory technical work for contracts or, if they did not, would hire consultants to ensure they could do the work.
The government would then have proposals for each project and had to award one, but had a lump sum fixed price for a project that was deliverable, he said.
The government, as the client, now had “the big stick” and could insist the contractor show and demonstrate transformation, Pienaar said.
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