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Following a Cabinet meeting held on 22 August 2018, it announced that five new non-executive members were appointed to SANRAL’s Board:

• Mr Themba Barrange Mhambi (Chairperson);
• Mr Alderman Robert Haswell;
• Ms Nkareng Mpobane;
• Mr Thamsanqa Piet Matosa; and
• Ms Lungile Madladla.

Ms Lungile Madlala returns to the Board. She was a member between 2008 and 2013, was a board member of the Construction Industry Development Board, was an executive committee member of the World Road Association and chairman of Inoxa Industries. She is a trained civil engineer with two decades corporate governance experience in both public and private spheres.

Mr Alderman Robert Haswell J.P. had a distinguished academic career here and internationally, was elected to the Pietermaritzburg city council in 1984 and was the first mayor of the Maritzburg-Msunduzi Transitional Local Council in 1995.

Ms Nkareng Mpobane has a degree in economics from the University of the Witwatersrand and has worked at RMB Private Bank.

Mr Thamsanqa Piet Matosa was president of the National Union of Mineworkers (NUM) in 2015 and in 2018 global deputy president of the Building and Woodworkers International Workers Union.

Mr Themba Barrange Mhambi did his BA Honours at the University of Johannesburg and his masters at New York University in the USA. He has been active as a lecturer, project manager and strategy developer at several educational institutions as well as state-owned enterprises.

Access to sophisticated equipment used in construction is one of the biggest hurdles facing emerging companies. They often do not have the capital to purchase major machinery used for excavations, ground moving and the grading of roads.

But emerging contractors in the construction industry will now be better able to participate in major projects following a landmark agreement between SANRAL and two construction machine suppliers, Barloworld and Bell.

The agreement with Barloworld Equipment will give black-owned enterprises greater access to equipment, financing and training which will enable them to tender more effectively on road construction projects managed by SANRAL.

“This will open up the industry to new participants and remove many of the barriers that prevent companies owned by black, women and youth entrepreneurs to compete effectively against the entrenched players in the construction sector,” says Skhumbuzo Macozoma, the Chief Executive Officer of SANRAL.

“Through our co-operation with Barloworld Equipment we are promoting the growth of black business and taking positive steps to support a sector with immense potential for growth and job creation.”

The Memorandum of Understanding sets out cooperation across a broad range of activities, including providing small contractors in the SANRAL supply chain with access to equipment, financing and training.

Together, SANRAL and Barloworld will promote partnerships in the fields of training, fleet management, marketing and communication.

Emmy Leeka, CEO of Barloworld Equipment Southern Africa, sees it as an opportunity to empower emerging contractors: “We have built valuable partnerships with black-owned enterprises through the years and this initiative will take our activities to a higher level.”

The other agreement, with Bell Equipment, will also help to promote fair competition in the construction and engineering sectors.

Small contractors will now be able to purchase, rent or lease road construction equipment that will enable them to participate in major tenders where high standards of equality are required. Bell will also leverage its existing partnerships with the financial sector to give small contractors access to financing.

Bell sees the agreement as an opportunity to position itself as a road construction equipment supplier of choice. “This partnership with SANRAL will enable us to grow our customer base and contribute greatly to the empowerment of emerging contractors in the industry,” says Bell chairman Gary Bell.

Macozoma says of the agreements: “Our primary objectives are to grow the construction and engineering sectors and attract new entrants, especially black contractors who can build businesses and create jobs.

“It is a trailblazing step for the South African construction industry.”

• Barloworld Equipment is a division of Barloworld Ltd, a multinational brand distribution company listed on the JSE.
• Bell Equipment has a global footprint and more than six decades of experience in the manufacturing of construction equipment.

Transforming the construction industry is a major thrust of SANRAL. The country-wide consultation on the draft transformation policy has been concluded, implementation of those sections that were generally supported has begun, the policy is now final with just some clauses requiring ministerial and cabinet approval.

But implementation of those sections that were generally supported has started. The various tender documents are being revised to give effect to the Transformation Policy.

Thus the market has been segmented to make for a more equitable approach – construction companies with CIDB grades 1-4, those with 5-7 and 8 & 9 compete in different sections of the contract market. Entry-level work packages (sub-contract) already normally go to those with CIDB grades 1 and 2.

There were two holdups in implementation, though.

One was the need to rework the evaluation system to ensure compliance with Treasury prescripts. This has meant a slow-down in awarding contracts, which had an impact on the broader construction industry.

The roll-out of some fifty projects has started, but these are in the design phase and construction will obviously start later than originally planned. The awarding of tenders has also resumed but the fact of the matter is simply that the effect of this delay will be felt for some time into the future

The second hurdle to overcome had a more serious effect. At times SANRAL’s road building operations countrywide came to a virtual standstill. This was due to the demands by so-called business forums which would just come onto a construction site, demanding 30% of the contract value but refusing to go through the proper prescribing procurement processes.

These “forums” remain an on-going risk. The route to counter this is to have more intensive stakeholder engagement with people and institutions in the affected areas, and engage the main contractor, subcontractors via the project liaison committee and the implementation of the principles of the 14-point plan.

It is only when all of this has failed that law enforcement authorities would be engaged.

Transformation does not simply mean that 30% of a contract value must go to the formerly disadvantaged without proper procurement processes being followed. It also means that the roads agency has to step in – to ensure there is open, equal and fair access, plus inclusivity. Classroom teaching and practical work on the ground are part of the approach. To prepare and guide the new small contractors to be able to execute the required tasks to fulfil the contract.

There is also a transformation desk to deal with all upcoming problems, as well as partnership agreements with various service providers for equipment, finance mentorship who can assist where SANRAL does not have the capacity.

The roads agency’s role in transformation has meant that more opportunities have to be provided. Support systems have to be in place to prepare, guide and mentor the new entrants into a highly competitive industry!

During 2017/18 SANRAL undertook a total of 223 projects to build new roads, improve existing roads, and rehabilitate roads in a sub-optimal condition. These projects on non-toll and toll roads directly under the agency’s management involved a total of 848km of roadway.

The total number and value of new construction contracts awarded in 2017/18 were considerably lower than in the previous year. In 2016/17, a total of 172 new contracts were awarded with a combined value of R15.9bn. In this financial year, there were some delays in the awarding of tenders for the design of projects. The reason for the delays can be attributed to a technical process initiated by National Treasury during the course of 2017. The issues at stake related to interpretations of certain regulations contained in the Preferential Procurement Policy Framework Act (PPPFA).

Treasury has since provided clarity about the definitions of provisional and prime cost sums and how they were applied in practice. The resolution of this matter provides greater certainty to both SANRAL and the broader construction and engineering sectors.

As a result, the Agency expects to see more tenders for road design coming to the market in the coming weeks. As we erase the backlog this will also kickstart tender processes for the construction of roads.

The reasons for some of the delays other than the above delays in awarding contracts, range from additional construction work required for slope stability measures and safety reasons, to disputes that arose either in the labour relations field or with community role-players in respect of local sub-contracting. The last factor has become a substantial risk to construction projects in several provinces and sometimes poses a serious threat to the safety of contractors.

SANRAL is totally committed to the participation of local communities in road projects and has formalised this through project liaison committees, which are now a requirement for all projects. The agency is devoting more resources to managing local-level stakeholder relations with the objective of improving communication across all stakeholders.

In 2017/18, SANRAL recorded total revenue of R16.285bn (2016/17: R13.95bn). An annual grant from the fiscus of R15.9bn was received.

Total revenue realised across all toll routes managed directly by SANRAL amounted to almost R5.2bn in 2017/18.

SANRAL’s total expenditure for 2017/18 amounted to R26 523m, and 66% of this spending was related to non-toll roads. Spending was approximately 2.3% lower than in 2016/17.

As it enters the third decade of its existence SANRAL has produced a long-term strategy – Horizon 2030 – that reflects the dynamic nature of the organisation, and the changing developmental priorities of the country.

In a parallel process SANRAL developed a comprehensive transformation policy which was widely consulted across the country. This policy recognises the agency’s pivotal position within the construction and engineering sectors and the impact that SANRAL’s tender processes have on the growth of emerging enterprises owned by black South Africans, women and the youth.

But the Agency is also responding to the needs of broader society especially in the fields of education and training. It has developed productive partnerships with local universities to improve the quality of educational outcomes in critical subjects such as science, technology, engineering and mathematics.

Some160 students and 200 high school learners benefit from bursaries and scholarships.

SANRAL’s own Technical Excellence Academy in Port Elizabeth is enabling post-graduate engineering students to make a successful transition from the academic environment into professional careers.

The National Treasury will remain the primary source of funding, but SANRAL will also, increasingly explore opportunities for public-private partnerships.