1
SPEECH BY JACOB MAMABOLO, MEMBER OF EXECUTIVE COUNCIL (MEC) OF INFRASTRUCTURE DEVELOPMENT ON BEHALF OF L N SISULU, MINISTER OF HUMAN SETTLEMENTS ON THE OCCASION OF THE AFRICA INFRASTRUCTURE AND CONSTRUCTION SUMMIT
23 MAY 2017
JOHANNESBURG, GAUTENG PROVINCE
Thank You Programme Director
All Members of the Panel
Construction and Build Environment experts and Industry players
CEOs of various businesses present
Guests
Ladies and Gentlemen
Firstly allow to tender the apology of the Hon Minister of Human Settlement Hon Lindiwe Sisulu.
Let me congratulate you for organizing a very important and exciting event. I am sure that we will have an exciting moment and point of reference for the next one.
Let me make the following brief remarks on behalf of the Minister
1 Introductory remarks
It is internationally acknowledged that urban centres attract investment and create wealth. They enhance social development and harness human and technological resources, resulting in clear gains in productivity and competitiveness.
Urbanisation is a powerful tool for development and a strategy to combat poverty, to provide adequate housing and to ensure access to basic services
Since the launch of government’s New Policy and Strategy for Housing in South Africa in 1994, we have made significant strides in fulfilling our Constitutional mandate of providing access to adequate housing for those most in need.
The construction industry has been our partners all along the way in not only construction of housing but in developing roads, water reticulation, sanitation, and electricity infrastructure essential to sustainable human settlements.
Together we have provided some 4,3 million housing opportunities with the accompanying infrastructure development.
However, the real challenges faced by urbanisation, when its positive aspects are recognised, are sustainability in the social, economic, and environmental dimensions.
Owing to the need to rapidly address the huge inherited housing backlog, subsidised housing developments have often not been sustainable. They have not been integrated into the urban fabric leading, to long travel times and cost to those households that can least afford it.
Likewise, the subsidised housing estates often still lack social and economic amenities that make for quality of life of the affected communities.
It is against this background that we have developed a range of new instruments and development approaches to ensure more compact integrated development that provides more amenity, greater housing choice, and urban efficiency.
2 Mega projects
Our aim is to vigorously pursue the social, economic, and spatial transformation of all our human settlements, with a focus on those areas with the highest potential for investment and where we can expect our investments to gear economic growth and development opportunities.
In short we have adopted a bold new vision for the transformation of our human settlements.
2.1 The new delivery paradigm
Therefore, in order to continue to address the pressures of rapid urbanisation, government will continue to make significant investments in human settlement housing and infrastructure development.
We will place more emphasis on improving oversight, management capacity, thus making sure that projects are socially and economically viable, sustainable, and represent value for money. They will also be located in areas of the greatest economic growth potential.
This is a paradigm shift in what we will deliver and how we will develop future human settlements that are socially, economically, and spatially integrated.
Hence, we have now moved away from past practice of large numbers of micro projects dotted all over the landscape to focus on a lesser number of integrated mega, and catalytic projects.
In order to take full advantage of economies of scale and delivery partnerships our focus is now on developing large / mega projects, driven by the provincial government, that are well located in the urban fabric, providing all the amenities usually associated with sustainable urban development.
Given the range of housing, retail, commercial and social services envisaged, these mega projects will be fully contained “new” towns of some 15 000 units each, linked to the existing cities with efficient and affordable public transport.
In order to embed social and economic transformation of our settlements we have also initiated a number of catalytic projects. These are designed to foster spatial, economic, social, and cultural integration. Investors in these projects will be required to actively pursue government’s transformation agenda.
Apart from subsidised housing the mega and catalytic projects will offer a choice of affordable rental or social housing, “gap” housing and fully mortgaged housing. The new towns will also include social amenities such as clinics, police stations, community halls, sports fields, crèches, schools, and other training facilities.
The projects will offer entrepreneurs opportunities to develop retail, office, and light industrial projects, business incubators and spaces for small-scale businesses to grow and thrive. This is an area where the private sector must take the lead.
The partnership approach places emphasis on social and economic transformation through integration and the creation of job opportunities – not only through the construction phase but also on an on-going basis.
Massive investment in infrastructure and housing will through public / private partnerships, also provide opportunities for the private sector to participate in the funding and provision of housing, infrastructure and other urban amenities.
Climate change requires infrastructure and housing to be resilient and sustainable and to minimise carry through and maintenance costs for both owners and municipalities. Therefore the green economy and moving to new more sustainable and lower maintenance technologies will provide opportunities for the private sector to innovate and deliver within a new paradigm in our mega projects.
Affordable alternative building systems also present opportunities – especially in moving to scale of production. There is a caveat though, that they must be approved and meet national standards and proven to be acceptable to the relevant communities.
3 Inner city and township regeneration opportunities
Given the huge existing infrastructure investments in our inner city areas and townships, it is clear that we must also give attention to regenerating these precincts.
To this end the Urban Settlement Development Grant (USDG) provides funding to municipalities directly to inter alia do so-called “brown field” and infrastructure redevelopment projects.
There are numerous opportunities for private sector partnerships in precinct redevelopment projects. We are already seeing significant private sector investments by progressive companies that are realising the potential of the inner city precincts.
4 Enhancing our capacity to deliver mega projects
Government’s oversight role to ensure that we deliver value for money in the mega projects requires significant additional capacity.
4.1.1 The role of the construction industry
Implementing projects of this magnitude presents significant capacity challenges to government that can only be augmented by the skills of the private sector.
Project design, financing, engineering, construction, and project management will all have to be provided in partnership with the private sector.
I believe that there are significant opportunities for the construction sector to participate in these projects and augment government’s delivery capacity.
Your participation is not only desirable but absolutely essential if we want to achieve our goals of inclusive and productive human settlements that provide for vibrant places to grow our economy.
4.1.2 The Role of the Housing Development Agency
It has become clear that if we are to properly fulfil our oversight and planning functions there is a need for government to have its own human settlement development agency. To that purpose we have extended the mandate of the Housing development Agency (HDA) to become a fully-fledged developer.
As such the HDA will be responsible for the catalytic projects from inception to final delivery. To this end the HDA will work with private sector partners, such as the construction industry, to enable the successful development of these transformational projects.
5 Status of the catalytic projects
The 101 prioritised catalytic projects received, went through a rigorous process of assessment and an independent audit firm, to ensure that they followed the approved procurement processes, audited.
The projects are in different stages of development where some are still at planning stages whereas others have already delivered units. The projects are implemented by either the Provincial Departments of Human Settlements or by the Municipalities and in certain instance both spheres of government as partners implement the projects.
6 Our agenda for social and economic transformation
In line with the Construction Sector Charter we will actively pursue a transformation agenda in the development of all human settlements projects.
6.1 Opportunities for women, youth and differently abled
A very important component of our transformation agenda is the empowerment and participation of women in the whole of the sector. Hence, at least 30% of the development opportunities in these projects have been reserved for women.
We are also actively pursuing the meaningful participation of the youth through the human settlement youth brigades training and participating in the planning, and construction processes of these projects.
We are heartened to note the role of the construction industry under the auspices of the Construction Charter Council in skills development and training, as also the efforts of the Construction Industry Development Board in this regard.
A representative percentage of participation differently abled persons will also be encouraged.
6.2 Participation of Black entrepreneurs
As part of our transformation agenda we have set a target of at least 40% for the previously disadvantaged both professional and construction employees, as well as in procurement to participate in these projects. This will provide significant opportunities to transform our society.
7 Financing human settlements
In order attain sustainable human settlements; it is essential that both the public and the private sectors commit funding.
Government’s role is to provide adequate shelter for those most in need and to develop and enable the development of infrastructure through planning and funding.
The private sector is geared to provide infrastructure and housing funding, development, management and construction expertise, and to putting together “win-win” partnerships.
Government is committed to addressing our urbanization challenges head on and has thus, in terms of the Division of Revenue Bill 2017, committed very significant resources towards the funding of our human settlement programmes and projects over the MTEF period.
8 Conclusion
In its 2016 edition of the Africa wide Captains of Construction and Infrastructure report it was estimated that in Africa:
“Inadequate infrastructure cuts growth by as much as two percentage points per year and leads to a loss of almost 40% of productivity”.
Investments in housing and appropriate sustainable infrastructure are pre-conditions for economic growth and being competitive in an increasingly globalising world.
Government has backed its new vision for the transformation of our human settlements with substantial funding and other resources.
Together we can make it happen.
As we all know the construction sector has always been vulnerable to economic downturns and exposed to the whims of investor confidence. I am only too aware of the current muted outlook for the Sector.
However, I view it as an excellent opportunity for the construction industry to reduce dependence on private sector investment and to form meaningful partnerships with government in achieving the transformation of our human settlements into vibrant places where our economy and communities can thrive.
Government has moved to a model of delivery at scale in integrated human settlements that is very well suited to the participation of not only larger players in the construction industry, but also private-private partnerships in pursuit of the objectives of the Construction Charter.
The participation of women, youth, and differently abled persons in the realisation of our human settlements transformation agenda is key to successful transformation and is provided for in our panning of the mega projects.
We have a substantial financial commitment over the MTEF and are looking for partners to enhance our capacity to deliver quality, value for money projects.
The revised mandate of the Housing Development Agency to be a fully-fledged developer means that the construction industry will have a single entry point to engage in the mega and catalytic projects aimed at transforming our urban landscape.
I would urge you to make full use of this opportunity not only for economic gain but also for the reasons of improving the efficiency and live ability of our cities and towns. After all our cities and towns are the engines that drive our economic growth and where our national wealth is created – they must be fully functional and work for every citizen.
We stand ready to partner with the construction industry and I would prevail upon you in your deliberations going forward to examine how such a win-win public-private and private-private partnerships could be structured.
I wish you well in your deliberations.
Thank you.