Bus industry B-BBEE stalemate

SHARMINI NAIDOO writes that the bus industry is experiencing little good news, considerable uncertainty, and much frustration when it comes to B-BBEE.

April was an extremely busy month for the transport industry and its politicians. Numerous events were scheduled and crammed into the diary with election day approaching. We had the transport summit for universal access on 25 and 26 April; an engagement with the Deputy Minister, Lisa Mangcu, on 26 April; and the Women in Transport gathering with Gauteng MEC of Transport and Logistics, Kedibone Tlabela, on 30 April… to name but a few. As stakeholders, it’s great to see movement on these fronts – but one has to wonder how much of it has been “electioneering”.

We also have to wonder at the pressure under which our industry has to operate. Rush jobs are a common occurrence in manufacturing; compromising quality to meet deadlines is almost always a risk. These days, it seems to be a trend within the transport industry to do the same, which may be very damaging.

The issue to which I am referring is Broad-Based Black Economic Empowerment (B-BBEE). The Minister of Transport appointed a new Transport Sector Charter Council in May 2023 with the mandate to oversee the implementation of the Integrated Transport Sector Codes and the alignment thereof to the Codes of Good Practice. The bus industry has been grappling with the council’s latest attempt to “push” through a draft scorecard. They had a year to consult on this – but have tried to strongarm the industry into finalising within a month.

Since the launch of the Integrated Transport Sector B-BBEE Codes in May last year, the bus industry has been invited to four engagements (with some stakeholders not being invited due to incorrect contact details or simply not being included). Despite the good intentions to host BEE 100 classes so that stakeholders could understand the criteria and principles, only one session was held (or maybe bus stakeholders were only invited to one).

In September 2023, the industry was presented with a proposed scorecard with key resolutions taken by the council without input from stakeholders. Those stakeholders were simply informed – as if it were law. In October 2023, an amended draft scorecard was presented with revised targets. In February this year, a revised draft scorecard with higher targets and new criteria was presented. 

Wanted: one-month wonder

Stakeholders were advised that they had one last opportunity to comment and that the draft scorecard would be finalised in one month and sent to the Minister of Transport, the BEE Commissioner, and the Minister of Trade, Industry and Competition (DTIC). Given the impact of this revised scorecard, it was unrealistic to expect the industry to be able to provide comment in such a short period of time, particularly in light of the lack of clarity and responses from the council based on previous submissions which were not answered.

According to the legislation, it is quite clear that in terms of section 12 of the B-BBEE Act, it is required that the Bus Sector Codes must have been developed and agreed upon by major stakeholders in the industry. Only then can the Draft Sector Codes be published nationally for public comment and input, for a period of 60 days.

In addition, “Statement 003: Amended Guidelines for Developing and Gazetting of Sector Codes”, requires that the proposed sector code must use the same definitions in respect of all beneficiaries and the same calculation methodologies to measure compliance as those used in the generic codes. It may only deviate from targets and weightings used in the generic codes, and introduce new additional elements for measurement, where those deviations or additions are justifiable based on sound economic principles, sectoral characteristics, or empirical research.

Any deviation is required to be supported by a rational explanation, sectoral or industry-specific justifications, and empirical evidence; the line ministry must “provide evidence of compliance with section 12 of the B-BBEE Act, as amended”.

As the voice of the bus industry, SABOA strongly believes that the above criteria have not been met; the engagements that have been held can hardly be considered consultation. Major stakeholders in the sector have not agreed to the key resolutions and draft amendments. Nor has the council obtained input from majority stakeholders in drafting the proposed scorecard.

Neither has any empirical evidence been submitted on how the key resolutions – and the proposed sector codes amendments, deviations from targets, and weighting – were determined; no evidence was provided as to how these could be justifiable based on sound economic principles, sectorial characteristics, and empirical research. In fact, no empirical evidence has been shared with the industry at all to justify any of the requirements.

How has the bus industry found itself in this predicament? One of the aims of B-BBEE, according to the Citizen newspaper in April 2021, is to ensure that the economy in South Africa is structured and transformed in such a way that it allows for the meaningful participation of its citizens to create capacity in the broader economic landscape. Transformation is key within the integrated transport sector, but stakeholders are entitled to constructive engagement. It is imperative that equitable and sustainable outcomes are achieved and that the end result is an inclusive process that can grow the bus industry.

SABOA is fully supportive of transformation in the industry and submitted comment in April to the Charter Council (however, at the time of print, the association was yet to even receive acknowledgment of receipt from the secretariat).

Expected changes

The following are some of the changes that the bus industry can expect (as presented to stakeholders on 13 February 2024). These may or may not be in the version that is submitted to the line ministry, BEE Commissioner, and Minister of DTIC (stakeholders have not been privy to this information):

• The lack of a transitionary phase-in period: as soon as the new sector code is published for implementation, the 2009 sector code will fall away, and the sector will have to comply with immediate effect.
• Equity equivalent programmes will be facilitated and approved by the charter council prior to submission to the DTIC.
• The removal of the modified flow through principle in the transport sector (this is still permitted in the generic codes).
• The inclusion of EAP targets under ownership (which is designed for employment equity and is not an ideal application for B-BBEE).
• Verification agencies will have to be approved by the charter council in order to verify the updated Transport Sector Codes (SANAS accreditation will not be applicable).
• Verification agencies approved by the charter council will assess the actual beneficiaries of all broad-based ownership schemes.
• There will be an increase in targets in excess of the generic codes in all elements.
• The inclusion of “advancement programmes” without defining such programmes under skills development.
• The exclusion of mandatory training from skills expenditure – only 40% will be included. This has been heard, but has not been confirmed in writing.
• A mandatory contribution to the Targeted Integrated Transport Sector Enterprise and Supplier Development Fund for generic enterprises and qualifying small enterprises.
• The mandatory integration of enterprise development beneficiaries into entities’ supply chain for generic enterprises and qualifying small enterprises. No rules have been established for the use of this fund, or which beneficiaries will benefit.
• An increase in targets in procurement, without due consideration or discussion with operators regarding availability of supply of fuel, imported spares, and other issues.
• Conflicting criteria for socioeconomic development contributions for people in rural areas and townships that are sector-specific.

In 2016/2017, the industry experienced similar frustrations with the draft sector code published for comment, which was not promulgated for the exact same reasons. Back then, though, there was at least more interaction and participation with the industry. With so many years having passed since the implementation of the 2009 sector codes (to which the bus industry is legally obliged to comply), it is imperative that the charter council meaningfully engages with the stakeholders and obtains the necessary support, so that the industry can move forward and achieve its transformational objectives.