US embassy cable - 05PRETORIA1746

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