Supplier Development (SD) Initiatives- Heading heading heading Date Supplier Development (SD) Initiatives- Port of Richards Bay 14th April 2016

WHAT IS SUPPLIER DEVELOPMENT? Background The Supplier Development (SD) Programme is an initiative of the Department of Public Enterprise as underpinned by the National Growth Path (NGP) objectives of the government. This initiative is supported by Transnet as a State Owned Corporation (SOC) SD aims to: Overarching SD Levers SD mechanisms Address an un-transformed manufacturing/services supplier base Mitigate the decline in manufacturing capabilities and capacity Address the monopoly structures within the local economy Ensure Transformation and meaningful participation of the mainstream economy Increase Capability – develop suppliers to have the know how/ability Increase Capacity – develop suppliers to be able to deliver on requirements Increase Competitiveness – develop suppliers to be able to compete in the South African supply base Programmatic: Assist Government in achieving its industrialisation objectives through the development of a local and transformed supplier base Strategic: Influence multinational organisations toward initiatives that lead to the development of local down stream suppliers through large-scale SOC procurement Small enterprise development: Assist local suppliers to improve their skills, in line with the B-BBEE strategy Job creation/preservation: Refers to an increase or preserve in the number of jobs due to the award of business from Transnet Small business promotion: Encourage the growth and expansion of BO EMEs, BO QSEs and BO start ups Rural Integration:Refers to suppliers functioning within rural community and regional areas in which the goods will be required. Industrialisation: Development of industries through machinery, equipment & buildings spend resulting in globally leading capabilities Focused: Assist local suppliers to improve their performance, enhance their existing production and skills capabilities by placing increased emphasis on benefiting previously disadvantaged individuals 2

SUPPLIER DEVELOPMENT CATEGORIES Category Description Industrialisation Development of industries through machinery, equipment & buildings spend resulting in globally leading capabilities Refers to skills transfer with an emphasis on the accumulation of knowledge and experience Generally targeted toward sector specific skills development with a focus on artisan and technical skills Skills Development Job Creation/ Preservation Refers to an increase or preservation in the number of jobs due to the award of business from Transnet Favouring more labour intensive methods for job creation Jobs include both skilled, semi skilled and unskilled The predominant emphasis for each category will differ according to the opportunities identified through detailed market analysis Small Business Promotion Encourage the growth and expansion of BO EMEs, BO QSEs and start ups through procurement and support mechanisms Technology transfer/ Sustainability Refers to process, know-how and IP associated with developing a competitive local supplier post the current transaction Rural Development and Regional integration/LED Refers to suppliers functioning within rural community and regional areas (i.e. LED) in which the goods will be required 3

TRANSNET HAS INVESTED IN AND SUPPORTED NUMEROUS ED INITIATIVES (1/3) Description Project cost Rm Duration yrs Create an enabling environment for SMEs to access economic development interventions; Create a culture of entrepreneurship; Transform Transnet’s supplier base ensuring active economic participation of SMEs; Develop and support new entrepreneurs through structured training programmes. Transnet ED Hub 3 GODISA Fund Collaboration between Transnet, Anglo American and Small Enterprise Finance Agency Provide financial and non-financial Support to Transnet Black Owned Supplier. 10 Itireleng Fund (in partnership with GEP) A strategic partnership with Transnet and Gauteng Enterprise Propeller Aimed at providing financial and non-financial assistance to ensure SMMEs benefit. 2 Transnet- Shanduka Black Umbrellas Business Incubation Two Incubation Centres are currently running in KwaZulu-Natal, Richards Bay and Eastern Cape (Coega) areas; A non-financial support service aimed at incubating 100% black-owned SMMEs, which meet Transnet’s supply chain needs. 2 4 Source: Transnet ED initiatives; Team analysis

TRANSNET HAS INVESTED IN AND SUPPORTED NUMEROUS ED INITIATIVES (2/3) Description Project cost Rm Duration yrs Transnet-Seda Supplier Development Programme The fund is aimed at strengthening the performance of supplier firms and enabling them to be globally competitive 3 Enhance the productive capacity and support Transnet black owned manufacturing suppliers within it’s supply chain in the next 5 years. Productivity SA 3 Partnership between Transnet , SABS, JASA and Wits Transnet Centre for Systems Engineering; Provide facilities and resources to SMMEs to research and develop innovative ideas which have commercially viability; Focused on social, technological and business innovation. Transnet Innovation and Research Centre (TIRC) 5 150 GIBS Academy Aims to empower new and existing growth-oriented entrepreneurs with a business education, mentorship and other support services in order for them to build or grow their enterprises 2 An initiative with AIDC; Employs a simple process of running a 4-day workshop where attendees will be taught the implementation of the problem solving methodology and continuous improvement. Rapid Improvement Process 1 5 Source: Transnet ED initiatives; Team analysis

TRANSNET HAS INVESTED IN AND SUPPORTED NUMEROUS ED INITIATIVES (3/3) -AAA123-20090304- TRANSNET HAS INVESTED IN AND SUPPORTED NUMEROUS ED INITIATIVES (3/3) ED initiative Description Duration yrs Project cost Rm Bakery Project A partnership between Transnet and Umnyakazo to empower 100% rural black women-owned co-operatives to run and operate container bakeries in their communities (EC, KZN and NW) 3 Through a partnership between Transnet and Furntech, this is a Centre of Excellence for the furniture industry , to offer business incubation and / or skills development in furniture manufacturing. This is focused specifically on Black People living with Disabilities Furniture Manufacturing Incubation 1 Nawe Zifunze Disable Driving School & Computer Academy Transnet has partnered with Vuka Academy and Road Accident Fund to establish a driving school academy and computer academy for disabled people in Richards Bay 1 Transnet SMME Business Toolkits “Transnet has partnered with SAGE Pastel, who will develop 1 250 SMME Business Toolkits, which covers all key areas of business management to our SMMEs.” 1 6 Source: PLP Programme: Achievements of Transnet’s CSDP Programme

THE TRANSNET ED HUBS PROMOTE SMME PARTICIPATION Transnet ED Hub inputs Outcomes Create an enabling environment for SMMEs Encourage and nurture a culture of entrepreneurship in South Africa Transform Transnet’s supply chain, ensuring active economic participation of SMMEs Develop and support new entrepreneurs through structured training programmes Strategic partners including DTI, SEDA, NYDA, GEP and SARS Relationships between Transnet, Provincial and National Economic Development Institutions Financial and Non-Financial Support to SMME’s Transnet provides infrastructure and manages the ED Hub Strategic partners provide human capital resources and other resources/ services Transnet ED Hubs 7 Source: PLP Programme: Achievements of Transnet’s CSDP Programme

SD PROJECTS- PORT OF RCB 8

PROJECTS: CONSTRUCTION OF ROADS, PORT ENTRANCES & TIDAL BRIDGES LOCALISATION (as per SOCs definition) Target: 100% Target met? Yes TOTAL EMPLOYMENT Aggregated Black people employed: 372 Aggregated Youth employed: 372 Aggregated Black youth employed: 372 Aggregated females employed: 54 Aggregated Black females employed: 54 Aggregated South Africans employed: 372 South Africans employed who are local community members: 372 9

PROJECTS: CONSTRUCTION OF ROADS, PORT ENTRANCES & TIDAL BRIDGES SUPPLIERS CONTRACTED (DIRECT) Aggregate amount of suppliers contracted: 7=subcontractors (including suppliers total 84) Large enterprises contracted: 4= subcontractors Medium enterprises contracted: 3=subcontractors Suppliers contracted who are South Africans: 7 Suppliers contracted who are local community members: 7 Suppliers contracted are black people: 5 Proportion of equipment the suppliers contracted purchased in South Africa: 100% SUPPLIER/ENTERPRISE DEVELOPMENT How many of the suppliers developed have been able to sustain their businesses after the completion of the SOCs project: 7 How many are black owned/people: 5 SKILLS DEVELOPMENT & TRAINING Female employees trained: 62 Black female employees trained: 62 Youth Employees trained: 218 Total employees trained: 218 Black employees trained: 218 10

PROJECT 4: CONSTRUCTION OF TRUCK-STAGING AREA LOCALISATION (as per SOCs definition) Project’s localisation target: 55.75%  How much of the localisation target was met?: 59.91% TOTAL EMPLOYMENT Aggregated Black people employed: 173 - Aggregated Youth employed: 109 - Aggregated Black youth employed: 109 - Aggregated females employed: 18 - Aggregated Black females employed: 18 Aggregated South Africans employed: 173 South Africans employed who are local community members: 173 SUPPLIERS CONTRACTED (DIRECT) Aggregate amount of suppliers contracted: 79 How many Large enterprises contracted: 63 EME’s Contracted: 7 QSE’s Contracted: 9 11

PROJECT 4: CONSTRUCTION OF TRUCK-STAGING AREA… SUPPLIERS CONTRACTED (DIRECT) Cont.… Suppliers contracted who are South Africans 79 (All) Suppliers contracted who are local community members 25 Suppliers contracted who are black people: 11 Suppliers contracted who are females: 2 Suppliers contracted are black females: 2 SUPPLIER/ENTERPRISE DEVELOPMENT Suppliers developed that have been able to sustain their businesses after the completion of this project: All 79 New employees recruited by the suppliers as a result of this project: 26 SKILLS DEVELOPMENT & TRAINING   Total employees trained: 104 Youth employees trained: 3 Black employees trained: 101 Female employees trained: 3  Trained artisans who are local community members: 3 Youth Trained engineers who are local community members: 1 Female Note: Operation of Canteen at Truck Staging contracted to a Black Woman Owned Business - Umqhele Bed & Breakfast 12

SMALL BUSINESS PROMOTION 13

BROAD-BASED BLACK ECONOMIC EMPOWERMENT B-BBEE OVERVIEW BEE performance slide to go in here BBBEE Performance KPI FY 2012-2013 FY 2013-2014 FY 2014-2015 BROAD-BASED BLACK ECONOMIC EMPOWERMENT TOTAL PROCUREMENT SPEND (Rm) 198,763,367.19 206,033,316.01 403,365,819.16 ACTUAL BBBEE SPEND (Rm) 181,623,275.15 179,473,045.89 389,248,015.33 TOTAL BBBEE SPEND AS % OF TOTAL PROC SPEND 91% 87% 96.5% BBBEE TARGET % 70% 90%   QSE BBBEE SPEND (Rm) 53,735,208.65 25,776,714.52 38,723,117.66 QSE AS % OF TOTAL PROC SPEND 27% 12% 9.6% QSE TARGET % 5% 13% EME SPEND (Rm) 34,396,346.64 34,075,203.66 39,126,484.44 EME AS % OF TOTAL PROC SPEND 17% 9.7% EME TARGET % 7% BL WOMAN OWNED (30% SHAREHOLDING) (Rm) 74,881,032.76 3,417,915.52 44,370,240.09 BL WOMAN OWNED AS % OF TOTAL PROC 38% 1% 11% BL WOMAN OWNED TARGET % 6% 8% BLACK OWNED (50% BLACK SHAREHOLDERS)(Rm) 130,970,760.03 51,751,740.92 91,564,040.91 BLACK OWNED AS % OF TOTAL PROC 66% 25% 22.7% BLACK OWNED TARGET % 9% 20% 14

EARLY PAYMENT FACILITY TNPA grants shorter payment terms (i.e. 7 days / 15 days upon presentation of invoice) to qualifying small businesses. Current status : 30 suppliers on early payment facility. REQUIREMENTS TO QUALIFY: Annual Turnover of less than R10 mil per annum Suppliers must provide valid documentation (i.e. Valid Tax Clearance Certificate & BBBEE Certificate). 15

FY2016/17 SUPPLIER DEVELOPMENT PLANS

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