Transport charter is leaking air
Fin24 - Oct 3rd 2011, 08:20
Johannesburg - The country celebrates October as transport month but black entrepreneurs in the trucking business are up in arms that the government has done little to enforce the industry’s empowerment charter.
Lennox Magwaza, the president of South Africa Owner Drivers’ Association – which represents black truckers – indicated this week that most of the black small and medium enterprises (SMEs) in the trucking sector still face the same challenges as before the charter was launched three years ago.
The Integrated Transport Sector Broad-Based Black Economic Empowerment (BBBEE) Charter was launched amid much fanfare in October 2008, and black truckers hoped the document would empower them to easily secure lucrative and long-term direct contracts.
Another advantage is that a direct contract could be used by entrepreneurs as surety when applying for loans from financial institutions to buy trucks, while chances to acquire a loan with an indirect contract are slim.
Black SMEs are still at the mercy of established brokers who award sub-contracts and pay themselves an exorbitant percentage of the contract, said Magwaza.
The charter aimed to see 25% of established road freight companies owned by blacks.
Magwaza said he was disappointed that a monitoring and evaluating system,as required by the charter, had not been established.
Sam Monareng, a spokesperson for the transport department, said though the charter was launched and signed in October 2008, it only became effective in August last year.
The charter went through a process of public comment and was approved and signed by the minister of Trade and Industry as a Transport Sector Code, to be made legally binding on all players in the industry, he said.
“Stakeholders were then given a grace period of one year from August 2009, with the five-year time frame effectively commencing from August 2010,” he said.
Monareng said the transformation of ownership in trucking was complex because the businesses are owned by corporate organisations, family businesses and owner-driver operations.
The department is about to implement a monitoring and evaluation framework and appoint a transport empowerment council.
This will play an oversight and advisory role regarding transformation.
An official who works for a parastatal that funds black truckers, and who wanted to remain anonymous, confirmed that small operators were still struggling to obtain direct contracts and brokers were crippling black entrepreneurs.
“The brokers are usually companies which have good business networks and pay truckers between 70% and 60% of the direct contract value,” said the official.
“If a broker takes 35% and pays 65% to a trucker, there is no way the business of the trucker is going to make money from the deal because of the other costs involved in running the business,” said the official.
The official said the trucking business was profitable, but an entrepreneur needed to own at least a handful of trucks to realise any benefits.
“An entrepreneur should own at least five trucks.
“Then if one truck breaks down, the business will still have other trucks to deliver goods and generate enough money to pay for the vehicles' loans,” said the official.
He advised small truckers to organise themselves into a group of entrepreneurs and then approach companies for direct contracts, in this way bypassing brokers.
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