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Radebe: Launch Broad-based Black Economic Empowerment Share Scheme by PUTCO (07/09/2006)

7th September 2006


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Date: 07/09/2006
Source: Department of Transport
Title: Radebe: Launch Broad-based Black Economic Empowerment Share Scheme by PUTCO

Keynote address: Launch of BBBEE Share Scheme by PUTCO by honourable Minister Jeff Radebe, Minister of Transport, Gallo Manor

“The importance of BBBEE in the Transport Industry”

Programme Director
Managing Director: Mr Franco Pasipia
Directors of the Company
Government officials
Transport operators
Representatives of SABOA
Ladies and gentlemen
Members of the media

It is indeed my great pleasure to be part of this landmark achievement to witness the launch of the Public Utility Transport Corporation (PUTCO) Broad-Based Black Economic Empowerment (BBBEE) Share Scheme. It is also an honour for me to be here with you to rejoice this most significant initiative in the bus sector.

In general, the initiative aims to address the imbalances of the past. The initiative is launched at the time when the Department of Trade and Industry (dti) is about to present to Cabinet finalised codes of good practice on Black Economic Empowerment (BEE) for approval this month. This then means the Integrated Transport Sector BEE Charter which outlines steps to bring about increases in the number of black people that manage, own and control the country's economy would be aligned with the dti codes and gazetted under Section 9 of the BEE Act of 2003.

We all know that pre-1994 era was characterised by limited or none involvement of the majority of South Africans in the Transport Sector with the exclusion of the Taxi Industry except that it remains unregulated of which the Department through Taxi Recapitalisation is trying to improve the business environment of this industry and ensure commuters are provided with safe and reliable public transport. The benefits thereof were largely protected and utilised by a minority of the population business purpose.

In essence, the Transport Sector was not regarded as a key component of economic growth and development to black people. Prior to 1994 the Transport Sector development was largely a missed opportunity. The President through the State of the Nation Address in February 2003 renewed government's commitment to fight the continued exclusion of the black population from mainstream business or economy.

The President also indicated that government would now look to further facilitating BEE through legislative and policy measures which are now happening as the dti recently enacted the BEE Act of 2003. The dti is about to finalise the codes of good practice and my Department is working towards finalising the Integrated Transport Sector BEE Charter, which encompasses the bus sector BEE Charter. All these instruments serve as basis for such endeavour.

Today a number of South Africans living in poverty is estimated to reach anywhere between 45% to 55% (20 - 28 million) and is not confined to any race group, however it is concentrated among blacks particularly Africans, whereby 61% of Africans and 38% of coloureds are poor compared with 5% of Indians and 1% of Whites. BEE has been effectively placed at the centre of economic growth to redress the imbalances of the past by transferring ownership of and management of South Africa's economy to the majority of its people and we are today witnessing PUTCO launching BBBEE share scheme that aims to change the status quo.

The new government that came into power in 1994 inherited a host of constraints that limited the potential of the Transport Sector to play a more meaningful role in the national economy. These constraints include:

* lack of inclusive, effective national, provincial and local structures for the development, management and promotion of the transport sector
* inadequate or non-existent ground transportation especially in the rural areas
* lack of infrastructure in rural and urban areas
* poor transport services
* poor involvement of local communities and previously neglected groups in the industry as a result of government policies
* limited development scope
* local communities did not have access to the lucrative Bus industry and Bus markets
* the potential of the domestic bus sector was largely suppressed due to the segregation access to bus opportunities that prevailed
* segregation policies restricted access to Bus infrastructure and services for the black population and such policies resulted poverty increase.

We all agree that the Transport Industry plays a very important role in our economy, which contributes to the socio-economic improvement of millions of South Africans. The BBBEE in the Transport Industry aims to among others:

* promote economic transformation in order to enable meaningful participation of black people in the transport industry
* achieve a substantial change in the racial composition of ownership and management structures and in the skilled occupations of existing and new enterprises
* make the Transport Industry more accessible, relevant and beneficial to black South Africans
* increase the extent to which black women, black people living with disabilities and black youth own and manage existing and new enterprises and increase their access to economic activities, infrastructure and skills training
* increase the extent to which communities, workers, cooperatives and other collective enterprises own and manage existing and new enterprises as well as increase their access to economic activities, infrastructure and skills training
* contribute to the sector's growth and sustainability.

During apartheid public transport,especially the bus sector was used as a tool to segregate black people away from towns for them not to use in residential areas but only for work purposes, which created a distance from work to home and travelling long distances. The then government provided buses as a mode of transport to be used by black people to and from work of which were ran separately from white people municipality buses through the Group Areas Act of 1950.

The intention was not to empower black people but rather to make sure that they were segregated from white people, they were excluded from participating in the industry that regulated competition. The bus industry impacted negatively on daily lives of black people, as there was overcrowding in buses; lack of proper terminal facilities, ranks and long queues and no safety and security measures. Most Back South Africans depended on buses as a mode of transport. Lack of competition within the industry excluded the majority of South Africans into the mainstream economy in terms opportunities through economic empowerment. The ownership within the sector was white owned with no blacks as either in management positions or shareholding with any skills development to improve knowledge of blacks in operating level. Most of workers within the industry were black people at lower level, with no equity ownership to top management. Today we see that disparity is being broken and our people are able to participate freely in the economy and able to benefit through the BBBEE Share Schemes such as those of PUTCO.

Let me take this opportunity to formally congratulate PUTCO with the efforts they took in making sure that BBBEE is happening in their company. My Department would also like to note and acknowledge PUTCO's efforts in participating in the development of the Integrated Transport Sector BEE Charter through the South African Bus Operators Association (SABOA). With the kind of BBBEE share scheme that PUTCO is implementing we would also like to edge other parties to take such initiatives in making sure that employees within their companies do gain economic benefits.

As government we are looking forward to make sure that our people understand economic opportunities that are there for them even to go further in assisting them to unblock the blockages that may arise during the process of advancing BBBEE. The work by the Department started as early as 1996 through the introduction of the White Paper on National Transport Policy and subsequently in 1997 the interim contracts were entered between Bus Operators and Department of Transport with empowerment models to accelerate the entry of black Small, Medium and Micro Enterprises (SMMEs) into the bus sector.

The government is also involved in the bus sector through subsidy, which is a sign that the bus sector has opportunities in changing the life of our people through business opportunities. The narrow based empowerment that focuses on ownership and management is not enough to empower black people to be part of the mainstream economy. As government we had to drive empowerment through the introduction of BBBEE. Since late 2002 till to date the Department is working with the industry to finalise the bus sector BEE Charter which sets targets as instruments which measure contributions to BEE across the seven indicators of broad-based black economic empowerment.

The indicators are: Ownership, Management and Control, Employment Equity, Skills Development, Preferential Procurement, Enterprise Development and Corporate Social Investment. It is important to indicate that with the about to be finalised codes of good practice by dti and the Integrated Transport Sector BEE Charter by DOT in collaboration with dti and sector stakeholders at large, we are delighted that bus industries like PUTCO continue to implement BBBEE without giving excuses that they are still awaiting for codes of good practice to be finalised as other industries or companies are currently doing. Therefore, we encourage that everyone in the transport sector should actually take what PUTCO is doing as a model.

In conclusion, ladies and gentlemen, you all know that we are faced with the challenge of making the Accelerated Shared Growth Initiative for South Africa (AsgiSA) and the 2010 FIFA World Cup a success. The achievement of these and our economic development goals are inseparable. Our objectives to make these a success depend on how we co-operate, co-ordinate, research, plan and implement together through advice and information sharing. Our progress in investing for growth and development will be guided by policies that we put in place and the role of the BBBEE should be part and parcel of making sure that our economy benefits the majority of South Africans.

I thank you.

Issued by: Department of Transport
7 September 2006


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