SOUTH AFRICA: AMBASSADOR MEETS MINISTER FOR PUBLIC

UNCLAS SECTION 01 OF 02 PRETORIA 001746

SIPDIS

SENSITIVE BUT UNCLASSIFIED

STATE FOR AF/S KGAITHER
USAID FOR AFR/SA/LDOBBINS
DEPT PASS TO USTR FOR PCOLEMAN
COMMERCE FOR 4510/ITA/IEP/ANAESA/OA/JDIEMOND

E.O. 12958: N/A
TAGS: EAID ECON ETRD SF
SUBJECT: SOUTH AFRICA: AMBASSADOR MEETS MINISTER FOR PUBLIC
WORKS STELLA SIGCAU

This cable is not for Internet distribution.


1. (SBU) SUMMARY Ambassador Frazer met with Minister for
Public Works Stella Sigcau on April 25 to discuss the
government's Expanded Public Works Program, upcoming BEE
charters for the construction and property industries
expected in July, and possible areas for U.S. foreign
assistance. The Department of Public Work's (DPW) received
no additional budget to support the Expanded Public Works
Program, so its primary role was essentially to coordinate
local, provincial, and national government activities.
Areas discussed for possible U.S. foreign assistance
included training, public-private partnerships, and program
monitoring and assessment. Along these lines, the
Ambassador agreed to facilitate a meeting between DPW and
USAID officials. END SUMMARY.


2. (U) The meeting between Minister Sigcau and Ambassador
was cordial and lasted forty-five minutes. Also attending
were Chief of Operations Dr. Sean Phillips, who discussed
the Expanded Public Works Program, and Deputy Director
General for the National Public Works Program Lydia Bici,
who discussed BEE charters for the construction and
property industries. Minister Sigcau designated DDG Bici
as DPW's point of contact to discuss potential U.S.
assistance. Bici also worked for Minister Sigcau when she
headed the Department of Public Enterprises from 1994-99.
The Minister has been at DPW since June 1999.

The Expanded Public Works Program
--------------


3. (SBU) Dr. Phillips explained that the Expanded Public
Works Program (EPWP) was initiated in April 2004 as an
integral part of the government's initiative to maximize
employment while improving the nation's infrastructure.
Since DPW had no budget to pursue the EPWP, its role was
essentially to coordinate local, provincial, and national
government activities. DPW did this by lobbying other
government institutions to employ more labor-intensive
methods and working with the Construction Education and
Training Agency to develop "learnerships" (training
programs) and "mentorships" (apprenticeships with
established businesses) for black entrepreneurs who could
then compete for government tenders. DPW would soon start
lobbying government institutions to use more of these new
black suppliers in public works projects. To carve out a
secure place for them, DPW had requested the National
Treasury to dedicate a certain percentage of procurement
opportunities to those in learnership programs. DPW was
also working with National Treasury to put together a plan
for the expansion of conditional grants to local and
provincial government, and with the Department of Local and
Provincial Governments to include labor intensiveness as a
condition for certain project grants. In addition, DPW was
working with local government to establish childhood
development centers and home based care enterprises.


4. (SBU) Sigcau commented that the government was still
learning how to deal with poverty. When black economic
empowerment (BEE) procurement was first initiated five
years ago, there were hardly any BEE companies able to take
advantage of new opportunities. The Government realized
that it had to provide them with training or nothing would
change. The Government also realized that it had to
provide an "exit strategy," so that newly created BEE
companies would be able to continue in some capacity once
their public works project was completed. To this end, the
DPW had approached South African commercial banks to
develop a lending program to new BEE contractors and
suppliers. The banks seemed willing, but wanted assurance
that prospective clients could reasonably expect to receive
contracts during at least a three-year period. Sigcau
added that another role of DPW in the EPWP was to identify
projects that were suitable for labor-intensive strategies,
realizing that some projects simply might not fit this
bill.

Black Economic Empowerment Charters
--------------


5. (SBU) Deputy Director Bici explained that DPW also took
the lead role for government in creating sector black
economic empowerment (BEE) charters for the construction
and property industries. The first challenge was assessing
the status quo and the second was determining suitable
targets. Minister Sigcau added that making these
determinations was not easy, since the industries involved
were highly fragmented and tended to be dominated by small,
family owned businesses. It might not be possible to
establish a percentage for BEE equity for each company, as
had been done by other sector charters. A more likely goal
was the achievement of employment equity at all levels
along with significant black participation in the two
industries. Bici said that she fully expected to finalize
both charters by July 2005. She was still looking for
funding for an "Advisory Council" that would serve as an
oversight body on the achievement of charter goals.

Possible Areas for U.S. Assistance
--------------


6. (U) A number of areas for potential U.S. assistance were
discussed. Minister Sigcau expressed a strong interest in
training and internship exchanges wherever possible.
Noting that USAID had extensive experience with
public-private partnerships (PPPs),Ambassador Frazer
commented that PPPs might be an area to consider.
Ambassador Frazer also suggested that U.S. businesses in
South Africa might be able to advise DPW on their
experiences with various BEE initiatives. Another
possibility was program monitoring and assessment, an area
where USAID had considerable expertise. The Minister
appointed DDG Bici as DPW's point of contact and the
Ambassador agreed to facilitate a meeting with USAID
officials in the near future.
FRAZER