 Thanks, I think Terrence is a hard act to follow But I'm also glad that he went first because I think you know many of the South Africans in the room will know that in the last Last probably 30 years or so a big part of The policy imagination in South Africa has drawn a lot from Malaysia So I think that's the first comment I want to make before I start I think the second comment is a lot of what I'm going to talk about today happens in a context where the credibility of Broad-based black economic empowerment as a form of affirmative action I think is under serious threat in South Africa across the racial divide And a big part of this has to do I guess with The formation and the creation of new elites and and what I want to talk about today Which in the paper I call the delong of one a phenomenon is really an outcome as some people suggest from below That really I guess is a characterization of how Disaffected many groups have become with BE in the formal sense. So Maybe just before I start just the outline of I guess what some of the things I want to talk about Firstly the framing of broad-based black economic empowerment is an economic rent not a very poor popular formulation in South Africa, but Quite an interesting one coming from a gentleman who's going to be addressing us tonight Darren as a mogul and this idea of the redistribution of opportunity and redress of Centuries of systemic international harm The role then of course of capital spending So a lot of the analysis historically of broad-based black economic empowerment is largely focused on the share of black people on the Johannesburg Stock Exchange or In the sort of exchange or the sphere of exchange rather than the sphere of production And so in a sense the study was really trying to focus in The built environment on new construction works and the contestations around rents associated with that And then also I guess the delong of Bonner phenomenon as an informal interpretation of rules laws frameworks and Institutions around broad-based black economic empowerment and the implications of disruption of a planned capital spending And then also some theoretical stuff around what effectively drives this as a violent tactic of entry and there's not really unique Very interesting sociological work done in places like Nigeria looks at this idea of Violence as political intrapreneurship and this might be actual violence or even the perceptive threat Or the capacity of violence among certain groups and we see a lot of this in the Niger Delta where You know this leads to the recasting and the reframing of who is in the orbit of rents and who can access rents And then lastly some reflections just on policy design and what we can do In reforming how the state thinks about procurement and supply chain So how did how did I go about this? Well a combination of methods primary data gathering did some interviews some People yeah, some people wanted to be anonymous And I must say some of them now that I think about in hindsight were very dangerous people and I'm glad that a lot of the Discussions did not happen in person And then of course also secondary data analysis Looking at some of the numbers coming through from stats essay and municipal financials census Capital spending Surveys media reports and then of course some analysis of the contractor database of one of the industry bodies in the construction space in South Africa, which is the Construction Industry Development Board the CIDB and then of course also analysis of some of the policy frameworks in particular tribally act preferential procurement regulations of 2017 which Was subject earlier on this year to a constitutional court challenge And I say quite a bit about that in the paper and then also the national infrastructure plan Largely because I guess a big part of the focus thematically of the paper is around construction in the built environment And I use a combination of tools from new institutional economics political sociology and Heterodox political economy to try and understand the drivers of what effectively has become a conflict Conflict that is disrupting billions of rands and projects in the public and in the private sector It's called the construction mafia in South Africa. I'm not too happy with that formulation of a mafia because I do think there's a diverse shade of things that are being done and maybe what is only common is the Tactics of work stoppages disruption and so on but very very different depending on where it is that you are Okay, so I mean I'm not going to go through all of this in a lot of detail But really this is just the theory around economic rents in the literature And I think it's quite clear depending on which type of literature you look at that rents are seen in different ways Often when we talk about rent seeking and a lot of the sessions in this conference, you know It's quite disparaging. I guess of this idea of economic rents in general Also interesting that a lot of the discussions that would follow the sessions were always saying, yeah, maybe we need a political economy approach and part of the difficulty of a political economy approach is that you know There has to be some assessment of the value judgments we making about certain economic phenomena And it's never always. Hey, that's good or that's bad or you know, they are saints and they are sinners But effectively is about context and how that matters And I take a framework that says well not all economic rents are bad There are actually forms of productive and developmental rents that yes might be a subversion of the price mechanism as an allocative resources But effectively are aimed in a transitional society in achieving particular outcomes. I also look at them Economic rents in the South African context and do a bit of a historic analysis even predating the Union of South Africa in 1910 And then also bring it forward to the trouble be act and the extraction of rents Which was a key feature of settler colonialism in apartheid in South Africa Where effectively rents were extracted by regressive taxation via Kalaba legislation and other mechanisms effectively to Guarantee the social reproduction of the white population in the country And so in effect, you know, that's some of the stuff that I talked through But I think South Africa also is an atypical example of what You know, and I think this this discourse has become quite popular in the US of late drawing on the work of Cedric Robinson and others This idea of a racial capitalist society, right where racism is a central feature of how capitalism takes root And in many ways, you know, this is draws on the work of Bernard Macubané who speaks about this long before Cedric Robinson in his work But also be then is a response to this Received or inherited framework of racial capitalism and is about subverting it in a very meaningful way It's about promoting economic unity in the society protecting a common market protect promoting equal opportunity and equal access But also ensuring that there's a spread in access and control of productive assets among those who historically did not have access to that so It's important to frame this because I think before we even get to what elements of be there to understand that be actually is an economic rent And the idea is the focus has to be on equity ownership Yes, which has been a big part of the literature and the focus and what a lot of people are disaffected by but also it has to be about enterprise and supply development And a critical part of that is preferential procurement, which is at the center of the of the of the paper Management control skills development and socio-economic development now preferential procurement is a distinct element I guess to to this first part here, which is equity ownership in a sense It's about providing for categories of preference To designated groups and I'll come quickly to what those designated groups might potentially be in the allocation of contracts And of course assisting them to be protected and to advance the interests of these categories of persons now the expectation In the procurement sense is that this is in the public sector But increasingly for private firms who need certain things from the state. It might be licenses. It might be you know Regulation it might be you know subsidies concession or finance and so on There is an explicit expectation that they comply with the triple B act and in particular the elements around enterprise and supply development Now as you can see here This is drawn from section 9 of the preferential procurement regulations of 2017 now you can see here This idea of subcontracting is what in a way sets the stage for what I call the Telangok Bono phenomenon It's distinct from me getting a minority equity stake in an existing business But this one is about saying any new project that happens That is above 30 million and in some cases as the office of the chief procurement office in the National Treasury Says not only those that are above 30 million, but any project Where feasible has to ensure that they're subcontracting to advance some of these designated groups and you can see these groups there it's What are called emerging micro enterprises? So that's the EME and then a qualifying small enterprises and those are defined by turnover thresholds And effectively the whole idea is around there have to be 51% owned by black people or 51% owned by black people who are youth who are women who are people living with disabilities or And this is the spatial dimension black people living in rural areas underdeveloped areas and townships and Townships of course are peripheral areas in the urban space You know similar to flavellas or barrios and so on now of course this is then the basis of Some of the violence that I'm going to touch on shortly But I argue that a lot of this violence on sites where people come in bring AK-47s disrupt construction sites and so on Occurs because of four related reasons the one is the relative economic and political payoffs of An environment of lack of consequence of some of the extortionist action and that's related also to this idea that Douglas North and many others put forward which is Inlimited access orders, which are I guess many of the underdeveloped countries in the world This idea of a state that doesn't have a secure monopoly on violence In the sociological sense and creates opportunities for contestations around the orbit of rent distribution So how rents are distributed in whatever framework? Is then open to contestation reframing and continuous negotiation and conflict Similarly the persistence of what Peter Ecke and Nigerian political scientist calls The distinction between the civic and the primordial and I think this is quite interesting in South Africa because you know One of the cleavages is not only the racial cleavage in South Africa But coming as we do from a system of ethno national forms of indirect rule This specter of tribalism is also something that is quite big and I know tribalism is a very lazy term for me to use Because the whole notion and idea of a tribe is a colonial imposition But let's work with it for now because in a way what this speaks to is this idea of non-capitalist forms of power bases That are a distinguishing driver and a feature of how this contestation of rents happens And this is why this phenomenon is distinct in Guazulu Natal as compared to maybe how it defines expression in Cape Town And then the last comment of course is this issue of economic concentration in particular sectors and the Perceptions or even the reality of significant barriers to entry into key product and service markets create some challenges And all of these seen as a whole Influence whether or not Informal interpretations of BEE knife. I go back here. This is the formal framework, right? But for us to opt for a violent framework is determined by a combination of these four factors Now let me maybe start just with the fourth factor around concentration one of the things I did in the study was to analyze the CIDB contractor database and to say If indeed we followed the 30 million obligation to the letter Now 30% of a subcontract is around 9 million, right? But in order for you to access that you need to have a CIDB grading of a certain level Which introduces a chicken and egg problem. You have to have done construction works That qualify you for at least a value in your work plan of around 9 million rand or so Now the database then shows us how many contractors actually who are registered with CIDB because you have to be registered with CIDB to get a contract How many of them? spatially Would be level one contributors so would be you know 51% or more black-owned or more And how many of them especially in selected cities that fall outside of the core of Say Johannesburg in Cape Town would actually qualify for this now think about it This has to be somebody ostensibly who is CIDB grade on the Y-axis there six and above and you can already see there that very few in Nelson Mandela Bay and Manga-Wong in particular And those are Bloom-Fontaine and Port Elizabeth Would actually qualify for that type of work And this introduces this idea of a spatial distribution of who can potentially benefit which is an issue I'll come back to a bit later But also if you look on the right hand side, which is a quote that comes from the competition Commission's concentration report that came out last year It's also important that we think about in the built environment what type of works we talking about here So the graph on the left is a composite of all categories of construction work So building civil engineering You know in some of the other more I guess accessible into so far as lower barriers to entry are concerned categories of construction works But actually if we look at this idea of concentration, it's quite clear that In the building category, there's less concentration than in the civil work category also the higher value projects are to be found in the civil category and The awards have been higher over the last few years or so in the civil category than in the building works category So even if you were to follow Triple B in this case to the letter you still would not formally derived be able to you know To access some of these opportunities and that last comment They're really saying top five firms in the civil work category even after of course a lot of the Deconcentration of the sector after the scandal and I encourage you to take a look at this South Africa hosted the 2010 World Cup And it was later found that a lot of the construction companies who were involved in building the stadia had colluded to fix prices on Contract work and then you know a lot of them were forced into something called the voluntary rebuilding program And they faced some issues because contracts dried up thereafter and a lot of them effectively You know merged and a lot of the mergers according to the competition authorities did not lead to a shift in the market Structure in the high value categories of work So and I think we see this here And I think the point I'm trying to make here is that a big part of where we are now with the economic recovery strategy of South Africa Is that infrastructures at the center of it and so too if you look at the second bullet there is this idea of enforcing local procurement Rules as a way to transform But we can also see on figure one here, which is from status a data that the big budgets Capital spending wise are actually sitting in municipalities and state-owned companies So national and provincial governments really don't have a lot of money by way of big Budgets for construction works, which is where the contestations are being fought over But similarly if we look at this graph These two graphs here now the one at the top is looking at all the metros So you've got Buffalo City municipality here formerly East London Cape Town, Johannesburg, Tuane, formerly Pretoria, Ecurulene, which is probably the industrial center Eteguini, Durban, Mangawung, Blumfonte and Nelson Mandela Bay, which is Port Elizabeth So those are the big metropolitan municipal areas and this is how much they've spent on new construction works Between 2017 and 2020 we can already see Around 2020 or so or 2019 and 2020 massive declines in how much has been spent on new construction works And similarly if you look at the SOCs if we take out Escom One of the interesting things is that we haven't seen this phenomenon of Telangok-Bona in Escom We've seen other forms of Mafioso tendencies in Escom, but they've been rather distinct from what we've seen here And it's quite clear that if one looks at the compound annual growth rate of a lot of this between 2015 and 2020 in the SOCs That a lot of them as the people expected to spend the big money Actually have not been doing so Some of it is explained by state capture and some of it of course is explained by the weakening And I guess the gutting out of capabilities inside of the SOCs So let's take a look at this Telangok-Bona story So it starts in 2014 Business forums and youth groups. That's the form organizationally takes right and What it does if you look at 2017 It's the start of site invasions But also the site invasions occur in a way where there's continuous engagement dialogue and negotiation With some of these Authorities here that are engaging in this work primarily it a Gweenie Which is where a lot of this starts of course later on there's a rebranding And I'll say a bit more about that in the next few slides or so. How many moments do I have two three? three okay now How do they work? Well, the first thing is that you know, they come on site as Asandral executive once said arrives on arrives in a bucky Fire shots in the air demands their share burns equipment pushes workers in front of moving traffic and rarely Very disruptive But who is doing this in? Many cases it's a coalition of what I would call the disaffected So former military veterans of the armed wing in particular of the governing party in Conde West is where many bus taxi operators funeral parlor Intrepid years interesting story around the funeral parlor intrapreneurs. Many of them were saying we don't want South Africans or black people of Indian descent To bury people in many of the black rural areas So as I said the cleavage is not only between black and white But there's also an intra national type of cleavage that is emerging and of course there's a political dynamic to it So if I can quickly go to this slide Or maybe let me go to this quote before I go to that slide the president of Delano Bono speaks quite interesting about the origin story of This phenomenon he says, you know, a lot of them used to be hit men, right? armed guns for hire and They effectively realized that actually the payoffs from criminality Relative, you know to more formal mechanisms that they could access via state procurement were probably much riskier And so effectively they needed a piece to capture the pie of what was coming out of The preferential procurement framework. So this was a response intentionally to state policy But similarly what we see here in 2017 if you go back to the timeline I shared earlier the disruption start a lot earlier and in starting the negotiation also happens But the negotiation happens alongside disruption and violent disruption So there isn't a sense that we're violent and then once we brought into the orbit we stop But actually the violence continues even where as you see here sandral sign some of the maintenance contracts with grade one Civil engineering companies, which is the lowest grade you can get Just a last comment just before I wrap up I think there is a big element to this that is linked to the fratricide and the disunity inside of the A and C and if you look at this particular poster Following the exit of a former president Jacob Zuma if you look at the bottom of the poster all of these groups That are engaged in this Delano Bono phenomenon. I effectively very much a part of the campaign 100% behind show laws which is what Jacob Zuma is called or hands-off And this is the president or the champion of radical economic transformation But also it leads as the last bullet is saying there to a very You know Decentralized and quasi-federal interpretation of what is effectively national policies around redistribution and that presents big question marks around this idea of a unitary state So what do we do? I think the first issue really is around policy design and execution And I think a key part of it is around the ambiguity that creates scope and space for these informal adaptations and What should we ideally be doing? Well, the one is to regularize the business for her Because anybody can set up a business for him tomorrow And effectively that obscures the genuine business people who might be looking for opportunity the second one is Policy needs to define what we understand local to be the ERRP speaks about local in the sense of the South African sense But the interpretation of many of these groups is that local means my neighborhood or my ward in Durban And if Murray comes from Cape Town, he should not be getting my contract And then I think the third one is really a confront this issue of the juniorization of supply chain functions in many of the SOC's and in the Municipalities who yield the largest budgets This is the function that is often given to the most junior people who are the most impressionable Who can be influenced in order to achieve particular outcomes? And then the last comment is that our procurement system acts like we're meeting the market for the first time every single time And so there's a big need for market intelligence to say who is in this market What is the composition of the actors in this market? What is the demographic profile of those actors and unfortunately a lot of that doesn't happen in many of the organs of state that are procuring? Thank you