Department of Transport “STRATEGY/POLICY FOR SMMEs & CO-OPERATIVES” 11 MARCH PORTFOLIO COMMITTEE ON SMALL BUSINESS DEVELOPMENT

1.Policy & Legislation Landscape 2.Problem Statement: Key Challenges 3.BEE Audit Preliminary Results 4.DOT Programmes & Interventions 5.General Government Programmes 6.Interventions by Small Business Development Department Structure of presentation Department of Transport 2

POLICY & LEGISLATION LANDSCAPE The Department of Transport derives its mandate to develop and support SMMEs & Co-operatives from the following government policies and legislative framework: Resolutions of the 53 rd ANC National Conference on development of SMMEs & Co-operatives – SMMEs & BEE policies should build cooperatives & other social ownership National Development Plan, 2030 Vision – to address triple challenges & aims to promote radical economic transformation Broad-Based Black Economic Empowerment Act (B-BBEE) – BEE Framework DTI Codes of Good Practice – Guidelines for BEE charters Co-operatives Act – Promote sustainable development of co-operatives & provides framework of co-operatives Preferential Procurement Policy Framework Act (PPPFA) – transparent, fair, cost competitive buying of government goods and services Women’s Charter for Effective Equality of 1994 – Outlines eight aims of gender equality Women Empowerment and Gender Equality Act - Promotes women empowerment and gender mainstreaming in social, political and economic structures of society A Strategic Framework for Gender Equality within Public Service - Seeks to promote transformation and ensure that there is full participation of women within the South African economy Local Content Framework – Promotion of local procurement 3

Problem Statement (1) General: Lack of transformation across the transport sector particularly within Aviation, Maritime & Aviation sub-sectors – still white and male dominated B-BBEE Contribution Level – BEE Company without Black Ownership PPPFA: 90/10 & 80/20 – Limits participation of SMMEs/Women-owned Companies towards government tenders Lack of long-term contracts Access to funding by SMMEs, co-operatives & women-owned companies No economic and business opportunities set-aside for SMMEs No transport related fund to assist transport related businesses Unfair BEE Practices especially in the freight industry 4

Problem Statement (2) Women related: Victimisation & discrimination of women – nature of operations is against women Low literacy levels & skills as well as lack of gender institutional support Lack of external resources to start a business – e.g. funding, access to sector information, business plan & knowledge of places offering assistance Lack of skills and capabilities to effectively run a transport business Lack of advocacy platforms 5

Survey Coverage: Provincial Spread The survey covered organisations in all provinces, with highest representivity in Gauteng There is a significant number of respondents operating in all provinces

Use of Scorecards 58% of the respondents are using generic scorecards in their B-BBEE verifications. This is of concern as it implies that the organisations are achieving better contribution levels without working achieving any of the transport sector priorities Some organisations indicated that they were not aware of transport sector specific scorecards while others indicated that their BEE consultants didn’t inform them of the need to use transport sector scorecards

B-BBEE levels Only 6% of respondents are achieving level 1 Level 3 and 4 have the highest representivity amongst respondents Organisations with level 1 to level 4 constitute about 78% of all respondents

Priority Elements Skills development was considered a priority element mainly because it had direct impact on employee productivity Although important, respondents indicated difficulties with implementing equity ownership Skills development was considered the most costly element to implement

AVIATION: B-BBEE Levels Only 3% of respondents are achieving level 1 Level 3 and 4 have the highest representivity amongst respondents Out of every 10 organisations, 6 are achieving at least level 4 B- BBEE level

BUS COMMUTER & COACH: B-BBEE Levels 11 8% of respondents are achieving level 1 Level 3 have the highest representivity amongst respondents Out of every 10 organisations, 7 are achieving at least level 4 B- BBEE level Over 70% of the organisations are large enterprises High usage of generic scorecard (67%)

Forwarding and Clearing: B-BBEE Levels 12 18% of the respondents have achieved level 1 Over 63% are using generic scorecard 72% respondents are receiving some of their revenue from the public sector whilst 91% are pressurised by their customers to implement B- BBEE

Maritime: B-BBEE Levels 13 14% of the respondents have achieved level 1 Highest representivity at level 4 with 36% of the organisations Over 57% are using transport sector scorecard Over 85% of respondents are receiving some of their revenue from the public sector whilst the 64% are pressurised by their customers to implement B-BBEE

Rail: B-BBEE Levels 14 None of the respondents have achieved level 1 Over 70% are using generic scorecard 64% respondents are receiving some of their revenue from the public sector whilst the same percentage are pressurised by their customers to implement B-BBEE

Road freight transport: B-BBEE Levels Only 3% of respondents are achieving level 1 Out of every 10 organisations, 8 are achieving at least level 4 B-BBEE level 71% of organisations are pressurised by their customers to comply with B-BBEE

DOT Programmes & Interventions INSTITUTIONAL MECHANISMS (1) InterventionKey activities BEE Charter CouncilIt will among others: drive implementation of empowerment, monitor progress of women empowerment & deal with challenges faced by emerging enterprises. Undertake B-BBEE Audits-to know & understand progress and challenges of BEE in the transport sector Conduct BEE verification of DOT and its provinces South African Network for Women in Transport (SANWIT) Promote the development and transformation of the transport industry To create an advocacy platform for women in the transport sector Facilitate economic and business opportunities for women Transport CEOs’ ForumDirector-General engages transport State-Owned Companies through the Transport CEOs’ Forum to raise plight of emerging companies and for these entities to develop appropriate interventions to address these challenges. 16

DOT Programmes & Interventions INSTITUTIONAL MECHANISMS (2) InterventionKey activities BEE DirectorateProvide advise, information & support to all sub-sectors Facilitate BEE deals, access to funds & training Provide resources & support function to the Charter Council Monitor progress of BEE within DOT and its provinces Ensure implementation of B-BBEE Codes Gender DeskPromote gender agenda in the transport sector i.e. social issues (health and wellbeing of women, safety and security, job creation and rural development, etc.) Women Advisory Committee Tasked to play an oversight and monitoring role to promote issues of Women Empowerment and Gender equality in the Transport sector 17

DOT Programmes & Interventions INSTITUTIONAL MECHANISMS (3) InterventionKey activities South African National Small Bus Operators Council (SANSBOC) Provide advocacy platform for small bus operators Help operators to interact with each other and government To participate to government programmes such as that provided by the entire chain of the roll-out of Integrated Public Transport Networks (IPTNs) spearheaded by Provinces and the cities. To facilitate good working relationships with the taxi industry Aviation Industry Transformation Letsema To address triple challenges within the aviation industry To transform the industry To facilitate skills development through address under supply of critical and scarce skills in the country 18

DOT Programmes & Interventions CURRENT KEY PROGRAMMES (1) InterventionKey activities Payment time Shortened payment period to SMMEs businesses Taxi & Bus Co- operatives Facilitated creation of co-operatives to take advantage of programmes such as IPTNs, Scholar transport & subcontracting to big bus companies like Putco, Golden Arrow, etc. S’hamba SonkeEnsure that through the S’hamba Sonke programme SMMEs help government to construct and maintain road infrastructure 19

DOT Programmes & Interventions CURRENT KEY PROGRAMMES (2) InterventionKey activities Long-term contracts BEE shares and business opportunities allocated to SMMEs, co-operatives and women-owned businesses through PRASA rolling stock capital project of R120 billion spending on trains in the next 10 years PRASA allocates other job and business opportunities through maintenance of train stations Some PRASA coaches & Transnet locomotives (R300bn transport infrastructure) to be produced locally which will make available opportunities to local businesses SANRAL allocates job and business opportunities which come from maintenance of roads to SMMES & co-operatives Access to infrastructure DOT has developed a strategy to revitilise branchlines/secondary networks which will help with movement of agricultural goods in the main. Branchlines is the railway infrastructure which will be accessed by small farmers as alternative to road transportation. Shift of moving goods from road to rail 20

DOT Programmes & Interventions CURRENT KEY PROGRAMMES (3) InterventionKey activities Owner Driver Schemes Road Freight Industry is encouraged to implement Owner Driver Schemes to empower employees of trucking companies. Companies implementing these schemes qualify for BEE points to uplift their scorecards. DOT assist drivers to understand contractual arrangements Training and business opportunities DOT & its entities continuously undertake workshops on business opportunities and training and development TETA skills development programmes Allocation of BEE points for skills development ATNS’ Women’s Development Programme & Mentorship Programme Provide focused development & growth of women in the workplace In March 2013 – Wits University conferred the Aviation Management Development Programme Certificate to 13 ATNS employees 21

DOT Programmes & Interventions CURRENT KEY PROGRAMMES (4) InterventionKey activities Aerospace Medicine Degree SACAA entered into an agreement with the University of Pretoria in training students in Aerospace Medicine Degree In March 2013 – 10 Degrees conferred. Operation PhakisaIn marine transport and manufacturing – government will explore the country’s natural advantage in maritime transport and manufacturing by capturing the benefits of growing volumes of cargo handling, sea and coastal shipping and supporting transport activities such as storage and warehousing SA to increase its share of ship-building and repair, rig repair and refurbishment or boat-building DOT will train 100 Youth as boat builders in inland B-BBEE ChartersEight sub-sector charters (aviation, Bus, forwarding & clearing, rail, road freight, maritime, taxi, & public sector) Set targets for Black people, Black women, Black youth, Black people with disabilities & rural communities 22

General Government Programmes Funding Mechanisms  DTI grants & co-operatives  NEF, IDC & DBSA funding Fronting  DTI is setting-up BEE Commission fronting  Labour Brokers issues will be reported here for investigation and appropriate action taken Skills Development  SEDA business planning and mentoring programmes 23

Interventions by Small Business Development Department Engage DTI & National Treasury to fastrack PPPFA regulations Assist with creation of transport related fund through NEF, IDC, DBSA, etc. Assist with Skilling SMMES, Co-operatives & Women-owned businesses Banks to ease requirements for SMMEs Help create Black/SMMEs Industrialists 24

Thank you Department of Transport 25