The construction industry empowerment charter had added five points for equity ownership to the 20 points the government had recommended in the codes of good practice, a move that showed the industry was lagging in this aspect, Sugan Palanee, a senior partner at Ernst and Young KwaZulu-Natal, said last week.

This was also an indication that the industry wanted to encourage the sale of equity to black partners, Palanee said.

Palanee, a specialist in black economic empowerment (BEE), said that according to a draft charter released for comment three months ago, companies would be awarded 25 points for selling to black shareholders.

"I am happy that it [the charter] is driving equity in the industry by increasing points for ownership," said Palanee.

"It is clear the message is that more needs to happen. Let's be honest, there are no major equity deals that have happened in the industry."

Nine months ago it was reported that the JSE's building and construction sector had scored the lowest of the six listed sectors analysed by Board Barometer, a diagnostic survey of the composition of boards and their attitudes to corporate governance and transformation.

The survey measured 19 JSE-listed construction and materials companies. Thirteen received a zero score for BEE and transformation.

This did not mean these companies did not have any BEE or transformation, but that it was below the threshold.

Palanee said the charter was putting more emphasis on skills development and employment equity. "Companies will get points for having clerical staff who will be included in employment equity, whereas the generic BEE codes only took into consideration those in junior, middle and senior management," he said.

Louwtjie Nel, the chief executive of WBHO Construction, said his company believed the charter was an excellent document and that it had been thoroughly debated by all the players in the industry.

"Each element of the scorecard is tailor-made to suite the nuances of the industry, and will therefore be far more effective in transforming construction than the case would be using the dti [department of trade and industry] generic," said Nel.

But not everybody in the industry is pleased about including administration staff. Bafana Ndendwa, the president of the Black Business Caucus Built Environment, said it did not consider this as empowerment.

"We need the core skills of construction to be developed. You can't say that is empowerment, because the secretary is not involved in construction," said Ndendwa.

Posted to the website by Business Report, March 4, 2009