Coega Project: briefing

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Meeting Summary

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Meeting report


8 April 2003

Chair: Ms L Jacobus (ANC)

Document handed out:
Coega Project: Presentation by Coega Development Corporation

COEGA website
Coega Development Corporation Annual Report 2001/2002
Coega Procurement Guide

Coega Development Corporation delegation
: Mr Z Mapoma (Executive Assistant, Office of the CEO: CDC), Ms N Msizi (Executive Manager, Corporate Services, CDC) and Ms R Khopa (Safety Specialist, Safety, Health and Environment, CDC)

Delegates from the Coega Development Corporation (CDC) briefed the Committee on the progress of the Coega Project. The overview covered: details of the location and new infrastructure to be developed, the process involved in the employment of the local population and their training, the procurement process, details of the construction villages being built and health, safety and environmental issues. The subsequent discussion included the following issues: the future use of the construction villages, the low proportion of women and disabled employed in the Project, HIV/AIDS issues, the profile of the present labourers and collaboration with the Department of Labour.

Ms Jacobus informed the Committee that Committee member, Ms S Ntlabati (Free State, ANC), had passed away. The Committee clerk would send a wreath and their condolences to the family.

Coega Project briefing
Ms Jacobus said that it was very important for the Committee to hear from CDC on the progress of the project as the Eastern Cape, where the project is situated, is one of the poorest provinces in the country.

Mr Z Mapoma (Executive Assistant, Office of the CEO: CDC) referred to the Committee as an important stakeholder and he appreciated the opportunity to provide a progress report. His colleague, Ms N Msizi (Executive Manager, Corporate Services, CDC) added that they wanted to give the Committee a clear idea of what was happening at Coega and that they could attend a follow up meeting if needed.

Mr Mapoma went through the Powerpoint presentation (see document for full presentation). The following additional comments were made:
- The Coega Project had two components: the Industrial Development Zone (IDZ), situated between Port Elizabeth and East London, around the Coega River, and the deepwater port located twenty kilometres from Port Elizabeth. -- The R2.4 billion development of the port was not a CDC project but was managed by the parastatal, National Ports Authority.
- This Industrial Development Zone was the first of its kind in South Africa.

After explaining the objectives of the project, he showed topographic slides of the location of the Coega Project - those areas already developed and future developments, as well as the National Ports Authority's deepwater port, Ngqura. He said that the N2 in the area was to be further developed to cater for the increased traffic and a new interchange was being build. In addition the new aluminium smelter would need twice the supply of the electricity than the surrounding Metro area already demanded and an agreement had thus been reached with Eskom to upgrade its electricity supply. The slide also indicated the new recruitment and induction centre.

The Committee were shown photographs of the construction villages and the projects already underway. Thus jobs were already being created. The Project is biased towards labour intensive methods of development in order to help alleviate the unemployment problem in the area. The new multipurpose construction villages were to house the employees and were of a very decent standard and included dining halls and other facilities.

Ms Msizi continued the presentation and looked at the socio-economic impacts of the Project. She said that CDC wanted to make sure that the Coega Project had a positive socio-economic impact even at the construction stage.
She showed them the Labour and Business Management System (LBMS) which they had adopted in order to ensure delivery on all of their objectives. The sytem is divided into Labour Management Services and Business Management Services. 'IR Management' referred to the relationships between employers, employees and trade unions involved in the Project.

Ms Msizi said that they had wanted to ensure that as many people as possible were reached in the employment process. Application forms for employment in the Coega Project were distributed by the CDC with the help of the Metro. Application forms were also left at municipal facilities such as libraries. Ms Msizi said that they had tried to inform the public as much as possible so that everybody could apply via post. They had deliberated whether to make the applicants pay for postage in light of the extreme financial restrictions of some of the applicants, but had decided that the applicants should pay for postage, in an attempt to ensure individuals did not send in more than one application.

Ms Msizi said that data capturers were employed to set up a database of the information gained from the application forms. The data was sorted by a number of criteria such as age, race, gender and skills etc. The applicants were then sent a receipt of their application. They then had to go through the task of verifying the information on the application forms. The construction companies had to use their database to ensure that the employment process was fair. The Department of Labour had also helped in the employment process.

Ms Msizi went through the slides, which broke down the labour pool into age, skills capacity etc. She showed the number of workers hired and the number that had been trained. The label 'Unspecified' used in the slides referred to the labourers seconded by the construction companies and therefore not on their database. The construction companies had been given a limit of how many of their own labourers they could bring to the Project as the majority had to come from the application process detailed above.

Ms Msizi noted that the proportion of woman employed was low due to the large amount of construction work in the Project. She said that they had not done as well as they wanted in terms of hiring disabled individuals, however whenever possible they hired disabled people such as for data capturing work.

Ms Msizi then spoke on the Small Medium and Micro Enterprises (SMME) development in the Project. She noted that the reason SMME development attempts often failed in other projects was a lack of appropriate support systems. They had therefore set up support systems [see relevant slides] which helped with monitoring, making sure the SMMEs complied with legal standards and regulations, that they were appropriately registered etc. A mentoring system was also established. The support services also include financial help. The inclusion of such support systems had increased the confidence of the financial institutions in their involvement with SMMEs in the Project. The Department of Labour was also helping in this regard.

Ms Msizi pointed out that eighteen SMMEs had been used in the construction of the construction villages. Many of these had previously been involved in the building of low cost housing. Construction managers had been hired to oversee the work of approximately seven SMMEs each. In addition each group had a mentor on site to help with the development of the SMME capacity. All SMMEs started with the construction of the simplex houses and if successful, they were given contracts to develop the duplexes and likewise the triplex construction.

Ms Msizi explained that 'conventional contractors' did not mean fully conventional, in other words SMMEs may have been a supplier to an established contractor or may have been a value-adder at some stage of the process.

Ms Khopa briefed the Committee on safety, health and environmental (SHE) issues. She said that it had been a challenge to ensure adherence to legislation regarding these issues and to ensure that employees worked under appropriate and fair conditions. They had achieved certification on the ISO 14001 for environmental standards.

Ms Khopa said that constructors had to show, at the tendering stage, how they had incorporated the health, safety and environmental specifications into their construction management. They had to deal with two different levels of understanding and management in this regard between the conventional experienced contractors and the newer SMMEs.

The inclusion of a programme to deal with HIV/AIDS had been a big challenge. At the tender stage the constructors had to include a costing for HIV/AIDS related costs. There were guidelines in terms of what was expected from the companies. They have also stated that they would embark on HIV/AIDS awareness training.

Ms Msizi referred to the challenges they had experienced in procurement (see slide 45). Some people had argued that they could not restrict employment to the Nelson Mandela Bay area when the whole of the Eastern Cape was in need of work. Hiring locals versus others depended on the nature of the work, for example, catering companies were hired from the local area.

She noted that they had experienced problems with 'untransformed' industries especially in the materials supply industry.

Referring to 'Key Success' (slide 50) Ms Msizi said that:
- They had received a lot of negative publicity regarding the relocation of the people in the Coega area, as many people had seen the relocation as forced removals. The case had been taken to the Human Rights Commission who had found in Coega's favour. The people in the area had already been identified by the Metro and local government for relocation to proper formal housing and that they had helped the Metro in the development of the housing (by providing project managers from the Coega project) and in the relocation. In addition people from that community had been used in the construction of the housing. That development of 300 houses was now being used as a yardstick for development using SMMEs.
- In 2001 there had been concerns that Coega had not been properly constituted and that people were receiving contracts without following the necessary procedures. In response to this the Auditor-General had visited the Coega Project. He reported these allegations to be unfounded.
- Another key success was in building the database on the labour pool in the area, which was not only being used by the Coega Project.
- Updates on the Coega Project were published in the Herald newspaper fortnightly.
- CDC had met with the contractor associations such as electrical, civil engineering and building as well as the trade unions. An agreement had been reached on basic standards such as the provision of transport to workers, pack lunches, working hours etc to ensure uniformity across the Project.

Ms Jacobus thanked the delegation for their detailed presentation. The Committee would take them up on their invitation to visit the Coega site.

Mr J Thagale (UCDP) asked who would be living in the construction villages once the Coega Project was completed. He asked what constituted 'labour intensive' in this Project. How many people were actually working on the Project at the moment and how many would still be working once the development of Coega had been completed.

Mr H Sogoni (UDM) noted that the CDC Annual Report stated that systems were in place to ensure equity for job seekers. However women were a tiny percentage of the work force in the Project. He asked what steps were being taken to address this. The statistics on race under 'Training Programme' in the Powerpoint presentation showed a huge gap between the number of "Black" people hired versus the number of Coloured and other people being hired. What informed the decision to follow this pattern in the hiring of labour?

Mr D Kgware (ANC) asked why there were no woman on the Coega board? Both he and Ms Jacobus echoed Mr Thagale's question on the future of the construction villages.

Ms Jacobus also asked how many workers were on site at the moment and where they were from. What percentage of the labour supply was disabled as their recruitment strategy should draw more people from this pool.

She commented that government was placing a lot of importance on the prevention of HIV/AIDS and is encouraging voluntary HIV testing. Large amounts of money are allocated to each government department for HIV/AIDS awareness. Yet when these departments briefed the Committee it appeared they did not know exactly what to do with the money.

She also wanted to know the level of collaboration with the Department of Labour. Were there mechanisms in place for unsuccessful applicants in the Coega database to be passed on to the Department of Labour?

Ms E Gouws (DA) complimented the delegation from Coega on their presentation and said that she had only been aware of the negative publicity. They should go ahead with the good work they were doing. She asked whether the construction villages had recreational facilities.

Ms Msizi response was as follows:
- The construction villages were not in the IDZ but were located in the Metro area, as the IDZ regulations do not allow for residential areas. They had received the assistance of the National Housing Corporation for this construction. The houses will be donated to the Metro once the construction phase was over. One cluster was on the north side of the upmarket Blue Water Bay area and the other at the bottom of Wells Estate. They would lend themselves to being bought by middle-income groups such as teachers, nurses, young salaried people etc. The multipurpose centres in the construction villages had recreational facilities such as indoor games and a soccer field. They also included medical facilities and that they were fairly self-contained complexes.

- The labour intensive approach was to look at the final product, for example a road, and then at the possible methods and materials to be used in its construction. If there was a viable labour versus machine intensive option that produces the same quality product, the labour intensive option was used.

- There were 4618 workers on site at the end of March, 1606 employed from their database and 3012 seconded by construction companies. The high number of seconded employees was due to the demand of the port construction for skilled workers and artisans for dredging etc.

- 30% of the labourers were from unspecified locations (no data as they are from the seconded labour pool), 59% were form the Nelson Mandela Bay area and 11% were from locations outside the Bay area.

- They could take a traditional stance and say that the construction nature of the work meant that few women would be employed. However they were taking the view that they could involve women in certain stages in construction, for example in mixing concrete. They were speaking to the Department of Labour about training women in construction work.

- They had found that the women-owned SMMEs were the best performing and that of the 17 SMMEs, all those owned by women had been given contracts to continue on the triplex construction phase.

- The Board had grown as the project had developed and enlarged and so it had not been constituted at one time when issues such as gender representation may have been attended to. Up till now the primary focus had been to get the government and Metro represented on the Board.

- The large difference between the number of Black people being employed versus other 'groups' was due to the fact that many Coloured, White etc workers had skills and were therefore not used in the less skilled labour intensive work.

- There would be more opportunities to employ disabled people in the recruitment centre. They were aware of the need to create more jobs for the disabled. The production of uniforms for the construction workers was earmarked as a project where disabled people were to be employed.

Ms Khopa pointed out that HIV/AIDS issues had been addressed at the tendering stage. The contractor had to submit a programme to Coega on how they would handle HIV/AIDS awareness/treatment issues and they had to include a costing for this. She pointed out that the construction industry was dynamic and some constructors where on site for a very short time so training and information programmes were difficult to implement. They had yet to see whether the education and treatment programme was working. She pointed out that they were not only limited to awareness programmes.

Ms Jacobus thanked the delegation for their briefing and the meeting was adjourned.


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