Symbiotic relationships between established and emerging enterprises are paths to solidifying black identity, reports Meshack Mabogoane
VISTAS of low-cost housing and other public works projects, coupled with elaborate affirmative action measures formulated by government, are cementing relationships between established (largely white) and emerging (mainly black) enterprises.
The construction industry is on its way to becoming a prime example of the productive potential of interplay among black opportunities and lobbying, the transfer of skills by established companies, and government pressure in developing emerging ventures.
In the eighties urban black housing and infrastructure became the domain of private developers — and black contractors, though subordinate, went on board. Since then, a build-up of expertise and experience has given rise to firmly-established, medium-sized black companies that are now well placed to reap the enormous potential inherent in the country’s reconstruction and development.
Rainbow Construction is a case in point. It consists of three black partners — Nxumalo’s Kronen Paving, Sechaba Construction and Chris Jiyane Builders (CJB). Each has undertaken Soweto projects. Kronen Paving has led in its field; Sechaba has been a major player in housing provision and CJB has distinguished itself in the upgrading of Sowetan Metro stations.
The companies’ track records enticed Thebe Properties to facilitate a merger to form Rainbow Construction, which then forged a partnership with Wilson Bayly Holmes (WBH) to tackle large, and Reconstruction and Development Programme (RDP)-related, projects.
Rainbow/WBH has built a soccer development stadium in Soweto and is working on the R43-million upgrading of Johannesburg’s central station and a hospice centre.
“For us to move into the big league it was necessary to team up with another well-established company,” says Chris Jiyane, joint managing director of Rainbow/WBH. “We looked for a company that is privately owned, has a good image in the black community and is pre-eminent in quality workmanship. WBH satisfied us in all this, in addition to its technical skills and financial resources.
“But, most importantly, we viewed it as solid and independent. This would make it possible to be very close to decision-making and pick up more expertise.”
The joint venture, in which black and white partners have a 40/60 split is, however, a transitional measure. Jiyane says in due course blacks expect to be the major shareholders.
At present, however, the symbiosis will hold. Rainbow needs WBH as an anchor in firming itself up, much as WBH needs Rainbow as a conduit to black areas and public works projects. The transient nature of these relationships runs through many emerging firms. They are viewed as a means of mustering substantial muscle for greater independence and black identity.
“The idea of joint ventures should not mean that the emerging ventures should remain subordinate and dependent,” says James Ngobeni, president of Sabtacu, an association of black technical professionals. “We intend to make blacks get really big in construction. Meanwhile, our task is to pair emerging and established firms so that the former may get invaluable experience to tackle major projects.”
The lure of public works projects, pressure from tender boards and the vigilance of black lobby groups like Sabtacu and the National Black Business Caucas have had a major effect on these relationships. Sabtacu played a key role in formulating the Ministry of Public Works’ Roster Programme which stipulates public sector contracts be awarded to major companies provided black partners are involved.
The role of government and parastatals as major clients in public works is pivotal in this empowerment process. Joe Madisha, a civil engineer and executive member of Sabtacu, says that “joint ventures become equitable and productive when the government is effectively involved in ensuring that emerging firms are given the chance by being paired with established ones. There is a genuine transfer of technical skills and management expertise which leads to real empowerment.”
He adds, however, that “imbalances in size can pose difficulties which makes monitoring of these relationships necessary. Yet black companies have a vast scope to grow, provided individuals play their part.”
Though well-established black construction and consulting firms are set to benefit, many small builders fear being swamped or left out of these developments.
A newly-formed body of small builders in the Vaal, the Land Developers and Builders’ Organisation, Ladebo, has come out in protest against the apparent dominance of white developers in black areas. Bricks Moloto, Ladebo’s spokesman, is reported to have said that only black developers must be allowed to develop black areas; otherwise “blacks will play boys to large white-owned contractors in order to survive.”
The vast amounts involved in infrastructural developments make the expulsion of major developers problematical. Alex Leonsins of Houses for Gauteng, (HfG), a Stocks and Stocks company set up to undertake township development in association with small builders, says that “This industry requires enormous amounts of money, skills and discipline.
“In our partnerships with black small builders we bring financial and technical resources while they come with specialist skills and work opportunities.”
Major companies like HfG bid for development work in laying out infrastructure and in turn bring in a host of independent and specialist builders linked to it on a sub-provincial basis to make their specific contributions. There is, however, a fear that these independents may be “swallowed” up and used.
Should the construction boom take off as envisaged in the RDP, however, the “emerging” and “established” firms will no longer be defined in racial terms.