CBN ARCHIVE - JULY '98:
South Africa - July '98 - The Culemborg bid is a bold but risky one

ULEMBORG Consortium chairman, Crispin Sonn, cheerily but confidently agrees that his bid approach to empowerment is, to say the least, bold. It might turn out to be inspired, or fatally flawed, depending on whom is reading it. But few can argue that its implementation with regard to benefitting communities makes most sense, and will be infinitely easier to carry out. The same however, cannot be said of its procurement policy, which seems to "reinvent the wheel", a policy that Sonn says they were studiously trying to avoid.

Culemborg speak in terms of an "empowerment spiral". In short, this means that Culemborg do not see direct equity participation for the poorest of the poor, as feasible, much less desirable. "Funds have to be raised, guarantees given and so on. Never mind future rights issues and other normal business practices that may occur, that will make it difficult to conduct if the really poor are equity participants in such a venture", says Sonn. In response, Culemborg says, they would much rather allow access to funds at the lowest level of the spiral, and propose to do this by using the Community Chest to distribute funds to the needy, "they service 412 charities. They know who the poorest of the poor are.

The poor know who the Community Chest is. Their distribution costs are far lower than ours will ever be, and their administration is funded from the outside. All of this means that more money will get to those who need it, and quicker. And we won't have to reinvent the wheel". He hastens to add that the spiral does allow for equity participation as people move from the lowest level to the highest, and as their improved circumstances allow them take control destiny.

At the centre of their procurement policy of services before and after construction, Sonn says that Culemborg will establish an Empowerment Development and Training Centre (EDTC) with funding of R50 million over 5 years. The EDTC would forge links with Ntsika and Khula and other small business aid structures and seek accreditation as a Tender Advice Centre. The EDTC will then help small businesses from the Western Cape tender for casino business. Small businesses operating in the same industry would be encouraged to form cooperatives to enhance buying power and negotiating muscle.

Up to 80% of all work will be undertaken to varying degrees by what they call "affirmable businesses". Some work will be given completely to these businesses and some to be completed in conjunction with established companies.

The SunWest reply is contained in their Targetted Access Programme (TAP), which aims to "give unambiguous preference to Cape-based suppliers in the full range of services required by SunWest". SunWest also claim that TAP was used in the construction of SunWest's Table Bay Hotel where 20% of construction contracts were given to emerging black businesses.

SunWest chairman, Peter Swartz says that up to 50% of design and planning work, 30% of the main construction, and 50% of concessions will go to previously disadvantaged companies. To accelerate this process, R10 million has been earmarked to establish concessionaires. An executive officer would be appointed to ensure compliance with these norms.

Apart from this, TAP aimed to be broad-based, create new work opportunities and skills-training. But most contentious has been the shot across opposition bows fired by Swartz when he called for "written guarantees of performance, and track record" from all bidders. Obviously all things that Swartz believes only he can produce.

Neither his competitors, nor the Board are expected to look on this as anything more than a salvo, since the nature of the enterprise has necessitated consortia who will not necessarily have worked together before.

SunWest have chosen to focus more on the macro-benefits of their casino bid, pointing out that R11 billion will be added to provincial coffers over 10 years as well as the creation of up to 26 000 jobs. R31 million has been targeted for corporate social investment over 10 years.

Deciding which plan is likely to work best is not going to be an easy task, since both are fraught with operational dangers. But on balance, the Culemborg bid seems to contain less danger and does make use of already accumulated knowledge, while making best use of government policy thrusts, which always helps to defuse political tensions.

But then the Community Chest will have to enjoy unfettered acceptance by all and sundry, and this is South Africa, where acceptance by all happens rarely.