O ne of the hallmarks of our relatively young democracy has been its contribution to the discourse on corporate governance, now enshrined in what is commonly referred to as the King Report.
In July 1993, the Institute of Directors in South Africa asked retired judge Mervyn King to chair a committee on corporate governance, whose report (King I) led to the first corporate governance code for South Africa. Since then, three more reports have been issued – King II (2002), King III (2009) and King IV (2016).
While the first three reports generally applied to listed companies, King IV extends the good practices used to benchmark corporate South Africa to the public sector.
Indeed, one of the key strengths of King IV, compared with its earlier editions, is the inclusion of sector supplements that provide much clearer guidelines to public sector entities
on how to apply good governance guidelines to their particular circumstances.
The objectives of state-owned entities obviously differ markedly from private sector companies. Generally there is no profit motive and, in many of our business activities, we must abide by the developmental mandate given to us by our shareholder (Minister), who represents the South African government.
This is reflected in our emphasis on the empowerment of small- and medium-sized enterprises, along with our commitment to allocate a growing share of work packages in the road construction and maintenance sectors to black-owned and women-owned companies.
The successes we have achieved in community development, skills transfer, bursaries and internships, as well as research into road safety and transport engineering, are well-documented.
SANRAL is incredibly proud of the contribution it has made to economic transformation and empowerment – without neglecting its primary mandate to manage the national road infrastructure.
As a public sector company, our activities are defined by the SANRAL Act and the Public Finance Management Act. Within this framework, SANRAL
has observed most of the principles of governance contained in the King Codes and will definitely continue to do so once King IV becomes effective in April 2018.
The value of King IV lies in the manner in which it has distilled 75 previous principles for good corporate governance into 17 – each linked to very distinct outcomes. The sector supplements make the report more accessible than the 2009 version and will enable entities such as SANRAL to measure our performance better against broader standards.
King IV recognises the need for state-owned entities to address the serious challenges facing South Africa, with respect to service delivery and the provision of strategic national
infrastructure. But it also emphasises the importance of such entities to be viable, efficient and competitive, to ensure the country’s citizens receive value for their money.
At SANRAL we are conscious of the fact that our state company operates in the public contracting arena, where transparency and accountability are of the utmost importance.
We took clear note of the public concerns expressed about historical collusion in the construction and engineering sectors and are adapting our processes and procedures to fall
in line with the recommendations of the Competitions Commission.
We recognise that SANRAL raises significant amounts of its capital from the bond and capital markets and that the choices we make on governance and ethical business conduct have discernible impacts on decisions taken by the investment community.
King IV emphasises the role of the board in risk and opportunity oversight. SANRAL is already a step ahead, combining the functions of audit and risk management in a single board committee of non-executive members.
Moreover, we welcome the emphasis King IV places on the management and protection of technology and information and the need for companies to develop a cyber-security plan.
Cyber-hacking is a growing threat globally and companies could forfeit their long-standing reputations in a single day if they are not adequately protected against malware and industrial espionage.
This is why the SANRAL Board and management have decided to elevate cyber-security within the organisation, consistently working to ensure our own IT systems constantly evolve to keep pace with increasingly sophisticated threats.
In the final analysis, King IV is a welcome step forward to guide the activities of both private sector companies and state-owned entities. The latter are increasingly operating in a global environment and it is imperative that we bring our entity’s governance in line with global best practice.
Roshan Morar is the Chairperson of
SANRAL’s Board
S takeholders in the construction, engineering and business sectors are getting first-hand information about SANRAL’s new long-term strategy, Horizon 2030, and its draft Transformation Policy.
This is being done through a series of workshops, conducted in more than 20 cities and towns across South Africa, where individuals, companies and organisations that will be affected by SANRAL’s new direction can discuss their future roles and contributions.
Horizon 2030 will guide SANRAL’s activities through its third decade of growth as it continues to plan, develop and manage South Africa’s national road network. It represents a re- examination of SANRAL’s core values and positions the agency within a rapidly changing global and regional economic environment.
The new vision builds on SANRAL’s major successes of the past 20
years, but also takes into account the sweeping changes in technology that are impacting the engineering and construction sectors. The strategy also includes fundamental reassessments of South Africa’s socio-economic priorities.
Horizon 2030 identifies four pillars of business activity, which are vital to SANRAL’s future growth and ability to deliver efficiently on its core mandate:
- Roads
- Road safety
- Stakeholders
- Mobility
The strategy also takes into account the realities of South Africa’s economic trajectory and the need for innovative solutions to fund vital and strategic infrastructure such as
the primary road network. A balance needs to be struck between SANRAL’s mandate and the range of funding options from the national fiscus and through public- private partnerships. State-owned entities like SANRAL will continue to play an important
role in building a capable public sector. The agency is positioned at the core of these activities and accepts the responsibility to maximise the participation of black contractors, professionals and suppliers beyond the minimum levels set by the legislative and regulatory frameworks.
In its Transformation Policy, SANRAL commits itself to breaking down monopolies in the supply chains of materials, equipment, technology and services, and to use its supply chain processes to ensure broad-based participation by black South Africans.
