By Thebe Mabanga
The transport sector has committed itself to higher empowerment targets than those set by the Department of Trade Industry and Competition and at the same time expressed its support for the department’s newly formed R100 billion Transformation Fund.
This emerged at a sector transformation engagement session held in Johannesburg that was attended by Trade and Industry Minister Parks Tau and his transport counterpart Barbara Creecy.
Creecy said the government has identified the transport and logistics sector as one of the key drivers of economic growth.
“Since the formation of the Government of National Unity, the Department of Transport has undertaken a reform process that seeks to rejuvenate the sector whilst also contributing to the social imperative of the transformation of our society.” she said, referring to road, freight, rail and port reforms that were part of Operation Vulindlela, the economic reforms programme now in its second phase.
The Integrated Transport Sector BBBEE Charter Council, which was set up in May 2023, has now developed a draft sector charter that will soon be released for public comment. It proposes 40% black ownership target as opposed to the DTI’s proposed 25 %. It also calls for 20% women ownership, against the department’s 10%
The council’s reasoning is that the department’s targets are 10 years old and some progress has been made. Despite setbacks, setting higher targets would stretch and focus various players.
Creecy cited the BBBEE Commission’s report, which found that in 2022 only 38.8% of transport and logistics businesses were black-owned, which was a decrease from the 48.6% recorded in 2019.
The draft charter also proposes stringent targets and ownership requirements. For a start, it proposes higher targets for board voting rights, setting them at 65% against the department’s 50% as well board voting right for women at 40%, against 25%
The council says it will have powers to approve equity equivalents before they are presented to DTIC. They are empowerment rules that apply to economies that cannot sell a stake to local shareholders, such as family-owned businesses or those with Intellectual Property limitations, who are then required to do more in other areas of empowerment.
The council then takes a tough line on recognising previous empowerment efforts by refusing to apply the modified flowthrough principle, or “once empowered, always empowered”. This means that a company will have its empowerment status reduced or eliminated as soon as black shareholders sell their shares.
In a considerable boost to Tau’s newly launched Transformation Fund, which was met with resistance and scepticism from a section of business, the transport sector pledges to support the fund by allocating 30% of its Enterprise and Supplier Development funds. ESD accounts for about 2% of Net Profit After Tax.
The charter then proposes a new category of skills considered technical skills to be renamed specialised skills. These require mandatory training, and the charter caps it as 40%, which is considerably high given that it focuses on scarce skills.
Creecy highlighted one of the entities under her department, South African National Road Agency (Sanral) having positive impact on transformation. Sanral has what it calls Contract Participation Goal of 30% of contract spend to be directed towards black, women and youth-owned businesses.
In the 2024/25 financial year, it engaged 2200 small and medium enterprises. Sanral says it directed 99,7% of its Routine Road Maintenance (RRM) spend to black owned companies and 77% of its non RRM on black owned businesses during the period.
Creecy also noted the Passenger Rail Agency of South Africa (Prasa)’s rail revival programme, which has placed the newly built blue trains on tracks as well as the railway station rejuvenation programme.
“Overall, the programme is expected to create between 350,000 and 400,000 jobs over the MTEF period, providing a much-needed boost in employment opportunities.” said Creecy.
The Airport Company of Soutth Africa (ACSA) also weighed in with its transformation efforts. Its overall procurement spend for 2024/25 was R4,042 billion. The B-BBEE spend achieved was R4,435 billion, or 75.67%.
“During this period R334 million was spent on emerging micro enterprises and R 1.2 billion on business owned by black women.” said Creecy.
The Council says the two sectors that require further consultation are the taxi industry, already black owned with a predominantly black customer base, and foreign-owned aviation entities.
Creecy notes that current initiatives to support the formalisation of the taxi industry include pilot projects to promote cashless payments systems, a review of the permitting environment and research into reducing the risk and cost of finance to ensure operators remain viable.
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