As the year draws to a close, I would like to start by acknowledging the various Board Members, Committee members and Branch Chairs who provide the support that they do in ensuring that we remain the apex organisation for the Consulting Engineering Industry, recognised not only locally but across Africa and the globe. This of course is ably driven by a dedicated team of people in the Directorate who equally need to be acknowledged. We are constantly reminded that without you, our member companies volunteering some of your key staff to participate in the various Committees, none of what we do would be possible and for this we laud you for your commitment.
The year gone by has been filled with a mixture of optimism and disappointment. Optimism raised through the election of President Ramaphosa, through the general elections held in May, whereas he had assumed office in 2018 already, when the then President Zuma resigned from his position under a rather dark cloud. The Country was possibly being too optimistic as it was well known that notwithstanding this endorsement through the Parliamentary process the ruling party remained divided on how they would support the President in his quest to rescue and grow the economy of the Country.
With economic growth pedestrian, pitched at 0.5% and Moody’s on our doorstep, threatening further downgrade of our investment status unless we reflect actions and some tangible signs of positive results, it has become more and more clear that we need action rather than intention. We have previously heard about the R300bn infrastructure funds earmarked to create this stimulus, with recent publications indicating that at least R 250m of this money having already been invested in infrastructure and of late a further R100bn in investments that had been pledged at this year’s Presidential Investment Summit. It is ironic though that locally the private sector has over one trillion rand for investment in infrastructure but we continue to solicit further investment through foreign companies.
At various forums through Business Unity South Africa of which CESA is a member organization, there is a resounding call for government to address the real issues, that could see all of these intentions turn to action and stem the tide of increasing poverty and the growing unemployment rate which is at a staggering 29%. The real issues are ongoing mistrust within government, mistrust within the private sector and mistrust between government and the private sector. Consulting Engineers South Africa have appealed to Government over the past year, following the elections and installation of a new set of Ministers for the various National Departments, inviting partnerships towards capacitation and delivery after sharing a brief congratulatory note on their appointments. The results of some of these initiatives so far has been, participation in a stakeholder engagement forum for regulatory bodies, where the Gauteng MEC for Infrastructure Development shared the Province’s intention to develop and publish a 5 yearbook of projects that will be actively monitored and updated. Interestingly CESA, though being a non-statutory body was invited and so recognised, in the same light as various statutory regulatory bodies who had been invited to this engagement. This is clear testimony to the prominence of the role we play in representing our members as a respected industry body, an attribute often overlooked by member companies who from time to time question the value proposition of CESA membership.
In addition, the City of Cape Town after a long hiatus during the tenure of the former Executive Mayor, have included CESA as a main role player in their recently restarted infrastructure liaison committees. Western Cape Government, Roads and Works have met with us and the matter related to unlimited P.I. requested in their SLA’s for Consulting Engineering firms is under review. Similar such meetings have taken place with SANRAL and they have made similar undertakings. The Engineering Council of South Africa (ECSA), following further appeals from CESA, are currently in the process of regrouping its Fee Guideline Committee with the objective of re-publishing fee guidelines in the first quarter of 2020.
We do still however face the impact of the political uncertainty, created through a fractious ruling party and coalition government at local levels seems to be as bad as having a single party mismanage the infrastructure development needs of the Country, both social and economic. Coupled with this toxic mix we have policy uncertainty, all of which influence either the water, the energy, transport and mining sectors. Poorly considered procurement regulations and legislation which causes all forms of public sector spending to be managed in the same way simply makes it more and more impossible to optimize funds earmarked for infrastructure development.
The Country is still facing one of the most difficult times in its most recent history. In our recent Bi-annual Economic and Capacity Survey (BECS), two aspects of investment in infrastructure are apparent, namely, that from the 2018 figures of R 281 bn invested, the private sectors contribution was 52% with that of the public sector at 48%. This negates the often-ill-considered narrative on the private sector being on an investment strike. Furthermore, it reinforces the need for government to claw back the ill-gotten gains from many involved in the State Capture project, tighten up tax collection, rethink the continuous financing of unprofitable SOE’s and improve procurement processes to optimize the investment we continue to make in infrastructure with a broader value for money perspective and not simply opting for least cost, especially when these are long term investments that will attract higher maintenance costs if ill-conceived from the onset.
In February this year, the CESA President shared with the industry the aspiration for a CESA – Government Partnership, in his “Reshaping the Future Together” address. The recent Springbok victory in the Rugby World Cup a few weeks ago is further testimony of how much more we can achieve if we work together.
Needless to say, the economic impact of the reduced investment in infrastructure has been felt by all member firms, though it is interesting to note that in the recent BECS Survey, larger firms reported an increase in earnings of 6.8% with small and micro firms, experiencing a 28% and 36.2% increase in earnings respectively. Medium sized firms however experienced a decrease in earnings as high as 25% over the first six months of this year. From an operational perspective, following the changes effected towards the end of 2018, the consolidation of the Marketing and Communications portfolio, supported by the services of a Public Relations company has resulted in higher visibility over the past 12 months with regular features in technical publications such as Engineering News, coupled with both radio and television interviews with prominent radio stations such as 702. In addition, our social media presence has grown on all platforms with Facebook having increased by 1000 followers compared to 2018, Twitter increased by 1000 and LinkedIn increased by over 6000 compared to November 2018. Overall in the last 12 months through our media efforts our advertising value equivalent has averaged at R 780 000 per month.
Our annual Indaba in Durban this year was reasonably well attended by members and clients, the Engineering Excellence Awards remain the flagship event for our industry and we had an almost full field at the annual Presidential golf day at Randpark this year. The annual Relay had to be postponed to early next year owing to the risk of poor attendance due to the unfortunate timing of the event.
In our contractual affairs and supply chain efforts, we have addressed an average of 20 member queries per month, many of which have been resolved. Our membership numbers however around 560 member companies, with a growing number of newly established smaller firms, whilst employee numbers have reduced to closer to 21000 as an increasing number of large firms have downsized in the absence of local large project opportunities.
On the Education and Training aspects, the market for training has become more and more competitive and unfortunately member firms tend to opt for low cost training events instead of quality-based training events provided through our School of Consulting Engineering. We do though find that at least 70% of the attendees to training offered through CESA are through Public Sector entities as there is that recognition of the CESA brand and the quality of the programmes we offer. The BCE, our flagship accelerated management development programme has been run successfully once again and we have invested in ensuring that the course material has been modernized to keep up with the changing world of business. We are currently in the planning phase with the Development Bank of South Africa for rolling out a countrywide programme for the development of professional engineering capacity in public sector entities in partnership with the South African Institution of Civil Engineering, which we anticipate will commence in the first half of 2020. An additional initiative we are working on is to find suitable partners for developing a work readiness programme that will assist the growing database of unemployed engineering graduates develop at least a minimum amount of practical workplace experience sufficient to assist in more readily being able to secure employment in the current market where costs recovery and productivity are key considerations for member companies facing business sustainability challenges. We have identified a programme that will be driven through Wits University Engineering Faculty which will be looking at such an undergraduate programme with a view to getting unemployed graduates onto a similar programme.
Consistent with our standing in the global industry, we responded to an appeal by FIDIC-GAMA to take over hosting its Secretariat with the potential longer-term perspective of establishing a permanent Secretariat in South Africa, much like FIDIC as a global organisation is headquartered in one Country. The approach in the past which has become unsustainable was for the Secretariat to be hosted in different countries over every three-year period. The recognition of CESA was further endorsed through receiving three out of five merit awards at the recent FIDIC Member Association awards hosted in Mexico City this year.
We continue to strive through our branches to get member companies to get together around common challenges and consider how we may as an industry address some of these with the support of the Directorate, though we do find that support by member companies for branch activities is limited, rendering the process more challenging in some areas. Our Young Professionals Forum too at branch level, the future of our branches, tend not to enjoy a consistent level of support thereby further hampering the ability for branches to be sustainable now and into the future. Whilst one understands the challenges of balancing productivity with such industry participation, we must be fearful of what the industry may become if we do not afford some voluntary time to preserving our excellent institution for another 65 years.
Excerpt from CESA November 2019 Annual Review to read more visit https://www.cesa.co.za/AnnualReview2019/mobile/index.html
Chris Campbell
CESA CEO |
