ACSA, SANRAL, C-BRTA & SAMSA 2021/22 Annual Performance Plans

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Transport

05 May 2021
Chairperson: Mr M Zwane (ANC)
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Meeting Summary

Video: Portfolio Committee on Transport

Annual Performance Plans

The Committee convened in a virtual meeting to consider the annual performance plans of the Airports Company of South Africa (ACSA), the South African National Roads Agency Ltd (SANRAL), the Cross-Border Road Transport Agency (C-BRTA), and the South African Maritime Safety Authority (SAMSA).

ACSA reported that global aviation continued to be among the sectors most impacted by the COVID-19 pandemic, and recovery to 2019 levels was projected to be slower than initially anticipated. It was grateful for the continued support shown by the Committee towards its financial recovery and sustainability. While its revised financial plan was based on a worst case scenario, the board had focused on working with management towards the implementation of a robust post-pandemic recovery strategy, and the continued government support was noteworthy and appreciated.

In the discussion, questions were asked about wasteful expenditure in supply-chain management, and what plan ACSA had to manage this expenditure; how many jobs had been created in the sector, particularly for women and youths; why ACSA was targeting an 80% stake-holder management and not 100%; whether any disciplinary action had been taken against officials involved in irregular expenditure; and how the Covid-19 pandemic was affecting ACSA’s financial situation and the creation of job opportunities.

SANRAL said its road network included 22 253km of national roads, with a notional value of R413bn, which was considered one of South Africa’s largest infrastructural assets. Of these, 87% were non-toll roads which were funded by a grant from Treasury, and 13% were toll roads. All of the national road network was under contracts to keep them in an optimal condition to ensure the mobility of people and goods. 58.4% of South Africa's roads were rated as being in a good to very good condition, 35.2% in a fair condition, and 6.4% in a poor condition. This was in line with international experience.

Members asked whose responsibility it was to deal with the 130 000 km of un-proclaimed roads, and what steps could be taken to address the situation. What was being done about the sinkholes on the N12 near the city of Matlosana, and when could the project be expected to be completed? Why was SANRAL raising the toll-gate fees? How would it meet its job creation targets? What mechanisms were in place to help the provinces, as they were failing to construct and maintain their roads?  

The C-BRTA said the Covid-19 pandemic had had a negative impact on cross-border movements, especially in the passenger transport and tourism industries. As a result, the Agency had seen a decrease in the number of permits issued, resulting in a decline of 14.4% in revenue compared to the same period in the previous year. The pandemic continued to pose a serious threat to its financial health. Management had attempted to explore other interventions to counter its impact.

C-BRTA’s key core functional areas included monitoring and counteracting any restrictive measures that may be implemented by other member states in the Southern African Development Community (SADC) region and advising the Minister of Transport on regional transport imperatives and challenges; developing partnerships with SADC counterparts and fostering positive relationships aimed at improving transport facilitation and the development of trade among SADC countries, and was responsible for the issuing and managing processes pertaining to cross border permits. In line with the shift towards quality regulation, it was developing an Operator Compliance Accreditation System (OCAS), which was a tool that would be used to regulate cross border road transport in line with quality regulation requirements. Revenue was expected to increase in line with the consumer price index (CPI) -- by 3.3% in 2022 and thereafter by 4.8% in the medium term, due to the increase envisaged from a revision of the permit fee regulations. Fines and penalties were expected to reduce in 2022 due to the closure of the borders for passengers as a result of COVID 19, and thereafter increase in line with inflation.

SAMSA said 2021 had been a financially challenging year for the Authority as, like most other organisations globally, it had been negatively affected by the Covid -19 pandemic. For the first time in the past three years, it had reported a deficit of R29.7m, which was due to the significant decrease in the number of vessels calling into South African ports.

Members of the Committee were not impressed by SAMSA’s presentation, claiming that most of the issues raised had been around for four years, and had still not been addressed. There were questions as to why there was still no permanent chief executive officer; what SAMSA was doing to implement the Auditor-General's recommendations; what its working relationship was with other countries in order to cope with the threat of Covid-19 at the ports of entry; and why there had been a lack of job creation at the entity.

 

Meeting report

Airports Company of South Africa

Ms Mpumi Mpofu, Chief Executive Officer (CEO), Airports Company of South Africa (ACSA), said that ACSA had started with aggressive financial initiatives to help the company sustain its business.

Through its funding initiatives, it had secured R3 billion in short-term banking facilities; concluded an R810 million loan with the Development Bank of Southern Africa (DBSA); realised proceeds of R1.27 billion (net of tax) from the Mumbai International Airport Ltd (MIAL) equity stake sale; and concluded the issuance of preference shares through the Department of Transport (DoT).

The following strategic initiatives were developed in support of the recovery and sustainability tactical plan:

  • ACSA global strategy.
  • Innovation strategy.
  • Aerotropolis strategy.
  • Cargo strategy.
  • Ground handling strategy.
  • Training Academy. 
  • Fuel strategy; and
  • Passenger mobilisation strategy and marketing campaign.

For liquidity management, the implementation of effective working capital management to preserve cash was enacted, and the utilisation of short-term credit facilities to meet short-term liquidity requirements were set up.

The immediate global response to the pandemic was to implement border closures and some restrictions on travel that saw the global skies with limited to no movements for commercial passenger traffic. There had since been a gradual and consistent improvement to date.

The already fragile recovery path of the industry since the end of the hard lockdown, especially the cross-border market, suffered a setback with a new COVID-19 variant being discovered in South Africa. In response, several key markets had imposed direct travel bans, or some barriers in kind, for travel to and from South Africa. Most notable were the USA, UK and Germany, which were among South Africa's top five tourist source markets by air travel. While the implications were more pronounced for cross-border travel, the new variant had the potential to also undermine domestic passenger confidence.

Emerging trends in aviation had been observed. Post-COVID global aviation had changed, with health at the core of traveller decisions. The United States and Europe had provided financial support for airlines to ensure survival from the devastating impact of COVID, and additional support was expected. South African Airways (SAA) was bullish about the recovery of the aviation industry, and led in the return seats published on Sabre Marketing Information Data Transfer (MIDT). COVID-19 would be the catalyst for rapid consolidation of the airline industry. Southern Africa had too many airlines for such a small market, so consolidation was inevitable. Bilateral air services agreement for South Africa were adequate to ensure enhanced connectivity with key markets, but reciprocity remained a challenge. In Africa, there were no restrictions to connectivity with South Africa, as there was currently near unlimited access.

ACSA’s vision was to be the most sought-after partner in the world for the provision of sustainable airport management solutions by 2030, while its mission was to acquire, develop and manage world-class airports and related businesses for the benefit of all its stakeholders and the socio-economic development of South Africa.

Its strategic pillars were to run airports, develop them and grow its footprint. By running its airports efficiently and developing them innovatively, it would enhance the regional economy. Improving its capacity and infrastructure would grow its footprint through effective operation and partnerships. A larger footprint would provide more impactful outcomes for the country and the world.

ACSA had adopted a "recover and sustain" strategy, with a focus on areas from now until 2030. Its strategy would be implemented over three timeframes, 2021 to 2025, 2026 to 2030 and beyond 2030, and was centred on its three strategic pillars:

2021 to 2025

It would extend and defend core businesses, and explore emerging businesses that could transform the company, increase revenue contributing to economic growth, and extend or move the business in a new direction with minimal capital expenditure.

2026 –2030

It would build emerging businesses to drive revenue growth and contribute to economic growth, to ensure the company’s longer-term future. This would involve more investment partnerships, with a focus on capacity.

Beyond 2030

The new ACSA would operate with a redirected focus and growth trajectory, with an emphasis on pronounced growth

ACSA expected a deeper traffic volume slow-down in 2020/21, followed by an improved outlook for 2021/22. Departing passengers were estimated to decline by 74.5% in 2020/21 (previously 50%). In 2021/22, departing passenger volume was estimated to be 39.1% less than in 2019/20. Aircraft landings were estimated to decline by 58.4% in 2020/21 (previously 50%). In 2021/22, aircraft landings were estimated to be 24% less than in 2019/20.

ACSA estimated that total revenue in 2021/22 would be be 34% lower than 2019/20. This followed a reduction in total revenue of 68% in 2020/21.

In terms of non-aeronautical revenue, ACSA's forecasts were significantly impacted by uncertainty, and a wide margin of error could be expected. Property rentals were estimated to improve significantly by 2021/22 from the lows of 2020/21. Advertising showed no growth into 2021/22. Retail, car rental and car parking forecasts had been carried over from the previous budget.

In terms of expenditure, the implementation of the R900 million operational expenses reduction and the R300 million employee cost reduction was evident in 2021/22, with a 19.8% decrease on 2019/20 expenditure levels at the company level. Expenditure levels post-COVID would be about 40% lower than pre-COVID budgets.

The R300 million reduction in employee costs in 2022 would contribute to a total employee cost reduction of 11%. Employee costs would make up 37% of total expenses by 2021/22, from 38% in 2019/20. Some provision had been made for incentive bonuses from 2021/22 onwards, amounting to around R120 million. This could be utilised for additional cost reductions that might be required as a result of a continuous worsening traffic outlook. The staff transport (allowance) allocation had been significantly reduced to only R36 million in each year.

Regarding operating expenses, by 2021/22 the top six line item expenses exceeded pre-COVID levels. Cleaning expenses remained at levels lower than 2019/20 until 2023/24. The information technology (IT) expenditure proportion to total expenditure continued to grow over the financial plan period. By 2021/22, IT expenditure had become the third largest expense line item. Security costs and repairs and maintenance would be managed within its capital allocations

In terms of ACSA’s debt evolution, debt -- excluding preference shares -- would decrease to R5 billion by the end of 2023/24. Debt -- including preference shares -- would peak at R9 billion before declining to R8 billion.

ACSA’s audit outcome had remained stagnant compared to prior years. It had received a financially unqualified audit opinion, with material findings on compliance with legislation. The financial statements submitted for audit contained no material misstatements. Compliance monitoring required intervention due to the material non-compliance on expenditure management, namely the failure to prevent the incurring of irregular, fruitless and wasteful expenditure. However, there was some improvement in the area of procurement and contract management, in that no material non-compliance was identified in this area.

In conclusion, ACSA sought to position itself as a key player in Africa and the world; to position its role in growing the South African economy through tourism and trade; assert a strategy aimed at long term and sustainable value creation; build win-win partnerships with its stakeholders; advance the passenger experience continuously; embrace a digitised business; maintain strategic focus areas in support of the 'recover and sustain' tactical plan; achieve progress with non-aeronautical revenues; identify and secure new business opportunities; and focus on environmental sustainability.

Discussion

Mr K Sithole (IFP) noted that according to the Auditor-General (AG), there had been wasteful expenditure in supply chain management (SCM). What plan did ACSA have to manage this expenditure? Its infrastructure was supposed to have job-creating opportunities. How many jobs had been created per sector for women and the youth? Could it clarify its broad-based black economic empowerment (BBBEE) status and its targets? What did it mean by SAA being bullish about its recovery? What was ACSA’s plan for travel-opportunity growth within Africa?

Mr L McDonald (ANC) said there had been no mention of the sale of the International Airports Hotel and other cargo buildings. When a government entity sold a building, how would the entity be able to purchase the building back as time went by, when property and building prices increase? While the properties and assets were being sold, why would ACSA mention in its strategic model that they sought to acquire strategic assets, when it was busy diluting its assets? This did not make any sense. When would there be a black-company, 100% owned by black woman or youths, being able to do their job? He complained that he had sent a letter to ACSA regarding issues at an airport which had been ignored. These problems had still not been addressed. He referred to ACSA’s staff-reduction of R300 million, and asked how the government could condone job losses in a severe recession. He said he had travelled through many airports across the country, and commented that there needed to be consistency across all the airports in terms of service and security checks.

Mr L Mangcu (ANC) said his personal view was that standardisation had to be followed through the Department of Transport at airports such as Polokwane Airport. Why was ACSA targeting an 80% stake-holder management, and not 100%? He said there should be zero-tolerance on issues of corruption and irregular expenditure. Why was ACSA’s target not 100%? How much had been spent on board meetings at ACSA?

Ms M Ramadwa (ANC) asked what kind of jobs would be created by ACSA. Had any disciplinary action been taken against officials involved in irregular expenditure? Could ACSA extend its scope to manage further airports?

Mr M Chabangu (EFF) asked how the Covid-19 pandemic was affecting ACSA’s finances and the creation of job opportunities. Was ACSA responsible for upgrading airports? If so, what was the condition of Free State’s (Bram Fischer) International Airport, and did it meet the standard required of an international airport? What criteria must it meet to be recognised as an international airport? Was ACSA benefiting from hotels surrounding airports, and if so, how were they making money from hotels? This was because the hotels were built on the airports' premises.

ACSA's response

Adv Sandile Nogxina, Chairperson of ACSA, said that the nature of some of the questions were such that ACSA was not able to furnish the required information. He appealed to the Committee to be allowed to furnish such information within seven days of the meeting.

Ms Mpofu said ACSA had created 18 983 job opportunities, and would come back with a detailed breakdown which would be made available in writing to the Committee. Covid-19 had impacted on its job-creation opportunities, and staff reductions had been affected by job creation, together with the poor economy.

With regards to SAA’s bullishness, the airline was booking seats in advance to show that they could book flights. Bullish meant confidence, which was a good approach that SAA and other airlines were taking. In terms of ground handling, historical arrangements were being updated to renew arrangements for licensing with the Department of Transport.

Regarding questions about Bram Fischer Airport, ACSA would respond in due course. ACSA had been approached directly to assist at non-ACSA airports, and this was well within its capacity. The challenge was a lack of funding to finance infrastructure upgrading and services by municipalities to upgrade airports. ACSA was financially constrained, and therefore could not take on such a responsibility if it would negatively affect it.

The Chairperson acknowledged ACSA’s responses and allowed it to compile responses to the Committee’s questions. He congratulated it for being proactive as an entity, for using its wisdom to raise money from non-core assets to fund itself, which set a good example of an entity being self-sufficient. He commended ACSA’s transformation goals, and looked forward to its progress.

South African National Roads Agency Limited (SANRAL)

Mr Skhumbuzo Macozoma, SANRAL CEO, said the entity's mandate was to manage and control the national road network and take charge of the development, maintenance and rehabilitation of national roads within the framework of government policy.

SANRAL’s Horizon 2030 defined four business pillars- activities that would enable it to deliver on its core mandate efficiently. Its four businesses were roads, road safety, stakeholders and mobility.

The SANRAL road network at a glance included 22 253km of national roads network, with a R413bn notional value, which was considered one of South Africa’s largest infrastructural assets. Of these, 87% were non-toll roads which were funded by a grant from Treasury,’ and 13% were toll roads.

All 22 253km of national roads network were under SANRAL RR contracts to keep them in optimal condition to ensure the mobility of people and goods. This included pavement conditions of 58.4% of roads in good to very good condition, 35.2% in fair condition, and 6.4% in a poor condition. SANRAL undertook proactive management of unstable slopes in all regions.

The DoT had identified five strategic thrusts to define its work going forward and the political agenda for the medium term:

  1. Safety as an enabler of service delivery

 Road safety was a SANRAL pillar, as per Horizon 2030, and initiatives ranged from engineering solutions and leveraging the latest technology, to education and awareness programmes.

  1. Public transport that enables social emancipation and an economy that works

Implementation of provincial treasury (PT) guidelines for national roads, and work under the Horizon 2030 mobility pillar to support PT

  1. Infrastructure build that stimulates economic growth and job creation

Rollout of SANRAL flagship projects and infrastructure investment programme.

  1. Building a maritime nation and elevating the oceans economy

Maintenance and rollout of infrastructure projects on national roads that connect ports to industrial centres

  1. Accelerating transformation towards greater economic participation

Implementation of the transformation policy and 14-point plan to ensure inclusivity

SANRAL’s key focus areas for 2021/22 include:

  1. Horizon 2030 implementation.
  2. Asset management systems for the timely maintenance of national roads.
  3. Rollout of SANRAL flagship projects and budget programme.
  4. Good co-operative relationships with relevant government departments, provincial and municipal authorities to implement Horizon2030.
  5. Transformation -- both internal and within the construction industry.
  6. Resolution of e-tolling in Gauteng (significant risk).
  7. Ongoing communication and stakeholder management efforts.
  8. Implementation of business development focus areas.
  9. Development of an e-toll roads policy context for future projects.

Mr Thabiso Mahlalela, Head of Strategy, SANRAL, explained the annual performance plan (APP) for 2021/22. There were 28 indicators in the APP. Some of these included the number of positive messages in national/regional media (print, broadcast or online) per month, and a regulatory audit outcome by the Auditor-General of South Africa (AGSA), and maintaining a zero qualified audit, amongst other priorities.

Mr Macozoma said SANRAL’s transformation policy was adopted in 2017 to reposition SANRAL to grow, develop, empower and transform construction and related industries, and was implemented through procurement processes and partnerships, and maximised the participation of black contractors, professionals and suppliers in commissioned projects.

SANRAL’s Roads Plan 203:

In line with Horizon 2030, the Roads Plan 2030 provided an overview of SANRAL’s planning over the next decade, supporting all four business pillars. It was based on current needs and forecasts, including national and provincial development planning.

It covered four main elements:

  • Preservation of the national asset through timeous maintenance, using stringent asset management processes.
  • Planning of the network to balance the need for mobility to maintain the national market advantage for freight and passenger movements, and access to communities, ensuring safe connectivity to meet social needs.
  • Expansion of the network by improving the capacity of existing roads and the construction of new roads.
  • Optimising operations along corridors through the use of intelligent transport systems (ITS), freeway management services (FMS), and research in pursuit of excellence in the delivery of the road network.

The term of SANRAL’s current Board would end on 31 August, and only six of the eight members were in place currently. The board member who was the representative of the National Treasury had resigned in November last year must be replaced, as must the independent, non-executive member who resigned in November 2018.

Looking at SANRAL’s transformation by numbers, the equity of contracting companies indicated the following:

  • 75% of the R6.9bn total tendered amount was awarded to black-owned contractors (R5.2bn);
  • 25% was awarded to white-owned contractors (R1.7bn);
  • R3bn was awarded to black male-owned contractors;
  • R2.1bn was awarded to black women-owned contractors; and
  • R25m was awarded to black youth-owned contractors.

SMME development

SANRAL provides opportunities on its projects for SMMEs and small contractors. This was achieved by unbundling projects into smaller packages for lower-graded Construction Industry Development Board (CIDB) entities. Contractors were encouraged to use local SMMEs.

  • 30% was ring-fenced for SMMEs in SANRAL’s procurement policy, as per the 2017 Preferential Procurement Policy Framework Act (PPPFA) regulations;
  • 1 933 SMMEs were awarded work on SANRAL road construction, rehabilitation and maintenance projects;
  • R2.996bn was earned by SMMEs through these contracts;
  • 73.6% of the awarded contracts and 80.2% of the value derived, benefited black-owned SMMEs;
  • There was 2.6% growth in black-owned SMME contracts (71% vs 73.6%) and a 19.2% increase in the value of black-owned SME contracts (61% vs 80.2%)

Employment creation, training and scholarships

All contracts stipulated a minimum percentage of local employment to promote community development:

  • 19 315 work opportunities -- equivalent to 8 575 full-time jobs;
  • 55.8% of work opportunities were taken up by women;
  • 52.2% of all positions were filled by youth (men and women under the age of 35);
  • 806 workers were trained -- 30.8% female, 73.6% male;
  • 2 001 courses were undertaken;
  • 230 students received SANRAL’s external bursaries and scholarships (68% of recipients were female)
  • R6.7m was invested in external bursaries

Ms Inge Mulder, CFO of SANRAL, said there had been a significant roll-over from the previous year on non-toll matters. The toll budget was much smaller, as South Africa had significantly fewer tolled roads. In terms of key audit matters, AGSA was satisfied that the revaluation of the road network and road structures was appropriate and reasonable, and had been appropriately disclosed in the annual financial statements. AGSA was satisfied that the expected credit losses on e-tolls and other receivables were reasonable, in line with their expectations and appropriately disclosed in the annual financial statements in accordance with the International Financial Reporting Standard (IFRS). AGSA was satisfied that e-toll revenue was recognised and accounted for in line with the requirements of IFRS 15 and appropriately disclosed in the annual financial statements.

Discussion

Mr I Seitlholo (DA) asked what un-proclaimed roads in the context of 130 000 km mean? Whose responsibility was it to deal with this particular matter of un-proclaimed roads, and what steps could be taken to address this issue? It was no secret that connecting roads and provincial roads were a nightmare to drive on across the country. What was the role that SANRAL played in terms of shared expertise, for it to collaborate with other stakeholders or authorities in making sure that those stakeholders were consulted so that that expertise may be filtered down from SANRAL to the ground level. Regarding the sinkholes on the N12 near the city of Matlosana, what had been the progress and feedback from the municipality, and when could the project be expected to be completed?

Mr P Mey (FF+) congratulated SANRAL on the good work they had done. It was quite clear that some provinces did not maintain their roads. What was the possibility that SANRAL could take over and care for these roads? A good example of this was the R62, which was an alternative to the N2, SANRAL had completed the road between the N2 and Kareedouw about one year ago -- was it true that it was going to take this road over?

Mr McDonald said that according to the budget presented by SANRAL, road maintenance on non-toll rolls would be reduced from R11. 6 billion to R5. 7 billion in the next few years. Toll roads' maintenance would be reduced from R4.9 billion to just over R4 billion. Why was there a reduction in this maintenance? R3.4 million had been spent on personal protective equipment (PPE) between March and October 2020 -- what was it used for during this period?

Mr Chabangu asked why SANRAL was raising toll fees.  He had not heard it say that they were going to reduce, or not raise the fees. SANRAL’s clients did not get subsidies from the government like other countries. How would it meet its job targets? How many jobs had it created between 2019 to 2021?

 Ms Ramadwa said SANRAL’s CFO had indicated irregular expenditure which had occurred -- did SANRAL have an action plan to address this? Were any disciplinary steps taken against officials who had incurred the irregular expenditure? There was a connecting road which led to the Kruger National Park in Limpopo, the R524, which had been damaged since February and had not yet been repaired.

Mr Sithole enquired about SANRAL’s paved networks, and said it knew the situation about South African roads. What mechanism was in place to help with the provinces' roads, as provinces were failing in constructing their roads, and gave the example of a road leading to Klerksdorp? The roads in KwaZulu-Natal were of a particular concern. How many people had SANRAL trained? 6.4% of paved roads were in a poor condition, according to the presentation,. What was SANRAL doing to fix them? Did it have a budget allocated to deal with this 6.4%?

SANRAL's response

Ms Lungile Madlala, SANRAL board member, apologised on behalf of the chairman of the board for being unable to speak at the meeting because of technical problems.

Mr Macozoma acknowledged the questions of the Committee, and said that written responses would be given regarding the sinkholes on the N12, the details of PPE expenditure, and the submissions made for Treasury to review the matter, and the training targets for intended beneficiaries. These would be submitted within seven days.

Un-proclaimed roads were roads, particularly in rural areas, which start off being a footpath and then eventually becoming a road. However, no one owns or maintains these roads. The Department of Transport had published a strategic framework for roads, where each road authority had to identify roads in its jurisdiction, identify their use and classify them, so that the authority could proclaim the roads and make an application for funding to maintain them. This had to happen. There were no un-proclaimed national roads. SANRAL provided support for road authorities, where the Minister of Transport approves the transfer of roads to it so that it owns and manages them. The SANRAL Act enabled it to do work for road authorities at their cost if need be. It assisted road authorities so that they had asset management capabilities, and engineers were trained to be deployed to them.

SANRAL had a target of growing its roads to 25 000 km, and were currently at 22 000 km, which meant there was a 3 000 km window for roads authorities to apply to the Minister of Transport through their premiers, which the Eastern Cape could do. SANRAL was mandated to adjust toll tariffs in line with the consumer price index (CPI), and could not go above it. An inflationary adjustment had been made, and SANRAL had not charged people more than the CPI. There were local user discounts which were given to people.

The 6.4% of roads in poor condition was well within the international benchmarks, and was not a problem. SANRAL first spends money on maintenance, then improvements and then new infrastructure. When the budget allowed for poor roads to be made into new roads, SANRAL was able to do this. Its budget did not allow for roads to be dug up. Everything was under control, but the problem was at the provincial and municipal level.

Ms Mulder answered the question regarding the maintenance budget reduction over the MTEF period. There were different maintenance actions. Routine road maintenance was quite consistent over time, depending on the state or condition of the roads themselves. Other actions, such as reseals, were cyclical. SANRAL had reduced the routine road maintenance budget, as was allowed, until budget was made available. However, the basics of routine road maintenance continued to occur.

SANRAL had implemented a quite extensive irregular expenditure action plan, which had been implemented about six or seven years ago. This assisted SANRAL with irregular expenditure, to the point that what was remaining were only those contracts that were still irregular from prior periods. A loss control committee deals with the consequence of irregular expenditure and determines what action would come out of irregular expenditure -- for example, disciplinary or training action.

The Chairperson thanked SANRAL for their presentation and responses. He acknowledged the good work it had done. He agreed with SANRAL that the issue of e-tolling in Gauteng had to be resolved in a timely manner. The Committee appreciated that SANRAL was firm about continuing to transform South Africa for the better. SANRAL should take note that tensions involving contractors and their sub-contractors’ from towns near where roads were being maintained, needed to be resolved. The issue of SANRAL taking over most of the provincial roads required caution, unless SANRAL no longer wanted to meet Transport Portfolio Committees in the provinces, as this may lead, in the long run, to provinces no longer having any roads to maintain and build.

Mr Seitlholo commented on SANRAL taking over from other authorities, and said this arose out of the frustration over connecting and provincial routes which were not maintained or even built. This was the point of the question asked earlier.

The Chairperson acknowledged Members' comments, and said an engagement between SANRAL and the provinces must be held.

Mr Thamsanqa Matosa, Chairperson: Social and Ethics Committee, SANRAL, added that he thought the question about jobs created from 2019 should form part of the written submission.

The Chairperson said he expected the written submissions in due course, and thanked SANRAL for their presentation and the good work that they were doing.

Cross-Border Road Transport Agency (C-BRTA)

Mr Moss Ramathe, Chairperson of C-BRTA, said the Covid-19 pandemic had had a negative impact on cross-border movements, especially on the passenger transport and tourism industries. As a result, the Agency had seen a decrease in the number of permits issued, resulting in a decline of 14.4% in revenue compared to the same period in the previous year. The pandemic continued to pose a serious threat to the financial health of the Agency. Management had attempted to explore other interventions to counter the impact. This APP was aligned to the mandate of the Agency as articulated in its Act, the Cross-Border Road Transport Agency Act 4 of 1998.

Mr Lwazi Mboyi, Acting CEO of C-BRTA, said the C-BRTA had been established in terms of the C-BRTA Act to primarily issue permits and regulate cross border transport through:

  • Eliminating impediments that constrain the flow of passengers and freight across regional borders;
  • Regulating competition of passenger transport operators;
  • Granting market access for freight transport operators;
  • Reducing operational constraints that have a negative impact on cross-border road transport industry;
  • Enhancing and strengthening the capacity of public sector; and
  • Building industry partnerships in order to empower the cross-border road transport industry.

C-BRTA’s key core functional areas included monitoring and counteracting any restrictive measures that may be implemented by other member states in the SADC region, and advising the Minister of Transport on regional transport imperatives and challenges; developing partnerships with SADC counterparts and fostering positive relationships aimed at improving transport facilitation and the development of trade among SADC countries; and was responsible for the issuing and managing processes pertaining to cross border permits.

There were 53 land border posts between South Africa and neighboring countries, 19 of which were designated as commercial border posts. There were four border posts that carried a significant volume of commercial traffic -- Beitbridge, Lebombo, Maseru and Skilpadshek --which were located in the busiest corridors linking South Africa to the SADC region, namely the North-South Corridor, the Maputo/N4 Corridor and the Trans-Kalahari Corridor. Key role players at border posts were the Department of Home Affairs (Immigration/ Border Management Authority); SARS (Customs); SAPS (Border Police); Environment, Forestry and Fisheries; Agriculture, Land Reform and Rural Development; the Department of Health (Port Health); and the State Security Agency.

C-BRTA’s implementation of the 1996 SADC Protocol on Transport, Communication and Meteorology ensured the Agency championed the establishment of the Cross-Border Road Transport Regulators Forum (CBRT-RF) in the SADC region, to drive the regional harmonisation agenda. The CBRT-RF had adopted an annual work/action plan agreed upon by regulators of the 12 SADC member states. The activities focus on specific areas of Chapter five and six of the SADC Protocol on Transport, Communication and Meteorology. The C-BRTA target for 2020/21 was to have implemented 20% of the CBRT-RF work plan.

In 2020, resolution of the South Africa and Kingdom of Lesotho cross-border route impasse was enacted. A national Ministerial task team (NMTT) consisting of officials from the national Department of Transport, the C-BRTA and the Free State Department of Police, Roads & Transport, had been established by the Minister to work on measures to resolve the impasse. A memorandum of understanding (MoU) was concluded between the International Cross Border Taxi Organisation (ICBTO) and the Madiboho Taxi Forum led by the Free State branch of the South African National Taxi Council (Santaco). The aim of the MoU was to forge working and operational relations between ICBTO and SANTACO. A draft bilateral agreement between RSA and the Kingdom of Lesotho was escalated to the SADC Secretariat to take a decision on some issues that both countries could not agree on.

A follow-up meeting was held with the Lesotho Transport Ministry in August 2020 to discuss progress on the agreement between the two countries. The meeting resolved inter alia that a letter should be written to the SADC Secretariat to request feedback on the meeting which was to be arranged between the two Ministers of Transport. There was on-going follow-up with SADC Secretariat to finalise the bilateral agreement.

C-BRTA had a Linking Africa Plan (LAP) which was aimed at improving African economies through transformation of the cross-border transport system, cross-border trade and creating an environment that seeks to promote meaningful intra-Africa trade.The objectives were to:

  • Enhance cross-border transport system efficiency and intra-Africa trade;
  • Enhance harmonisation of cross-border trade and transport governance matters, policies, standards and systems;
  • Enhance collaboration, coordination and integration of stand-alone initiatives geared towards realisation of objectives of the African Continental Free Trade Agreement (AfCFTA), Agenda 2063: the Africa we want, and various other programmes.

The LAP provides interventions needed to unlock Africa’s trade potential and thus position Africa as a significant trading player in the world economic system. The Agency had engaged various stakeholders to support the implementation of the various identified programmes, and was developing the Integrated Cross Border Management System (ICBMS) to replace the old permit issuing system.  The system would go live in the coming financial year.

The benefits of the new ICMBS were:

Convenience --  Apply for permits anytime, anywhere; improved turnaround times; and online notifications.

Cost saving -- Reduction of operational costs for operators – travelling to CBRTA offices; and renewal of permits online.

Simplicity -- Simplified application process, with ability to attach supporting documents; track and trace permits online; perform payments online.

The pilot of the ICBMS was also positioned as a tool for harmonising cross-border management systems in the region. This was envisaged to improve the regulation of cross border road transport in the region, which was critical for enhancing seamless cross-border road transport movements.

At a strategic level, the ICBMS would be implemented with a view to:

  • Standardise cross-border authorisation systems or permits;
  • Enhance cross-border road transport system efficiency;
  • Facilitate regional and intra-Africa trade; and
  • Regional integration.

At a system level:

  • ICBMS had capabilities that would guarantee the integrity of authorisation or permits issued by each member state;
  • Permits issued using the system would be fully recognised and certified by member states; and
  • Holders of permits would be certified to fully comply with regulatory requirements, thus assuring and guaranteeing quicker movements and a seamless flow of cross-border transport and trade across border posts and corridors.

The Agency was engaging countries in the region for piloting the ICBMS, once launched.

In line with the shift towards quality regulation, the Agency was developing an Operator Compliance Accreditation System (OCAS), which was a tool that would used to regulate cross border road transport in line with quality regulation requirements. It was a risk-based regulatory system for certifying and licensing cross-border operators based on quality regulation, and would be operated on the ICBMS. It would be underpinned by the introduction of market access criteria, auditing, operator registration, registration of responsible competent persons, operator profiling, certification and accreditation for authorisation of operations. It would connect the region through a coherent and harmonised regulatory regime that facilitates transport transit, improve compliance and operational quality, and enhance trade whilst addressing transport challenges and corridor inefficiencies. It was a tool that would facilitate seamless legitimate cross-border road transport movements and trade flow through mutual recognition of accreditation status. OCAS could also be integrated with other risk-based systems, such as the Authorised Economic Operator (AEO). There were currently discussions with SARS to pilot the AEO and OCAS.

In order to effectively facilitate cross transport movements, the Agency had developed a tool to identify corridor bottlenecks and measure transit times at border posts and corridor sections. This was aimed at assessing:

  • Bottlenecks which lead to delays and long transit times, which in turn increase the cost of doing business, affect trade flow, competitiveness of the region, productivity and sustainability.
  • Transit times experienced by cross-border road transport and trade along corridors; and
  • Assessing the economic impact of delays and long transit times.

The project was expected to contribute towards a targeted address of corridor bottlenecks, targeting those with the highest impact, targeted infrastructure interventions and informed policy advocacy. The Agency had conducted a pilot of the tool at three border posts -- Beitbridge, Lebombo and Skilpadshek -- and one section of the Trans Kalahari Corridor (TKC). There were on-going engagements with the border stakeholders and the TKC Secretariat on the outcomes and recommended interventions from the pilot.

Ms Rebecca Hlabatau, CFO of C-BRTA, went over the financial report for 2021/22. Revenue was expected to increase in line with the consumer price index (CPI), which was 3.3% in 2022 and thereafter by 4.8% in the medium term, due to an increase envisaged from a revision of permit fee regulations. Penalty Income was recorded in C-BRTA and payable to the Road Traffic Management Corporation (RTMC) as part of funding the Road Transport Inspectorate – governed by a principal/agency relationship. Fines and penalties were expected to reduce in 2022 due to the closure of borders for passengers because of the COVID 19, and thereafter increase in line with inflation.

Key assumptions relating to expenditure were that compensation of employees would increase in 2022 due to annual salary inflation and the filling of a few key vacant positions necessary to achieve APP targets. Goods and services would increase due to the 4.8% inflation over the medium and short term, and the additional cost of implementing new projects. Depreciation and amortisation would increase, with an increase in information technology (IT) capabilities.

Key assumptions relating to expenditure per economic classification for 2022-2025 were:

  • Expenditure on administration was expected to increase by 14% in 2022 due to the envisaged implementation of the ICBMS system and other systems aimed at creating a COVID-19 friendly working environment.
  • Expenditure on regulatory services was expected to decrease by 7% in 2022 due to cost containment measures necessitated by COVID-19, and thereafter increase by 4.8%, which included annual inflationary increases. This included human resource (HR) capacitation of regulatory services to facilitate the harmonisation of the regional regulatory regime.
  • Expenditure on research and development was expected to decrease by 5% due to cost containment measures, and thereafter increase by 4.8% per annum in the medium to long term.
  • Expenditure on stakeholder relations was expected to increase by inflation over the medium term.
  • Expenditure on law enforcement was expected to decrease in 2022 due to the closure of borders necessitated by the COVID-19 response measures. Thereafter, the general law enforcement expenditure was expected to increase in line with levels of inflation.

The C-BRTA had achieved clean audit outcomes for five successive years. The Auditor-General (AG) was still in the process of the audit for 2020/21 which was still outstanding. The AG had said that the annual financial statement had presented fairly, in all material respects, the financial position of the entity, its financial performance and cash flows for the year under review.

In the area of governance matters, the current board was not properly constituted. C-BRTA had engaged with the DoT to act in terms of consideration of the C-BRTA Act and the financial stability of the organisation. C-BRTA was funded primarily through permit fees. The Covid-19 pandemic had affected revenue streams. C-BRTA was looking at other revenue streams to supplement its main income.  

Discussion

Mr Mangcu said C-BRTA had indicated that by quarter one, a smart law enforcement vehicle would be deployed. What was this smart law enforcement vehicle, and where had it been deployed? The operator compliance accredited system seemed to not have gone away, as C-BRTA had reported on it in their 2018/19 report. The terminology had changed, but it did not seem like much had happened. In C-BRTA’s 2018/19 report, the focus was on the development of an implementation manual. Now it was the development of a system. He said it was confusing. What was happening to the OCAS?

On the issue of law enforcement, C-BRTA talked of a road safety strategy. However, the DoT had also approved a road safety strategy. What was the difference between the two? How would one grow the participation of tourism target groups as the C-BRTA-- could it provide an example to the Committee? The issue of permits in a digital manner had been in the works for a while. When would this be implemented? What was the susceptibility of corruption in the issuance of these digital permits?

C-BRTA had an agreement with RTMC -- why was it not factoring this into its plan? It had said that they tried to improve the movement of people and goods across the SADC region, but Beitbridge had been a nightmare for years. What was C-BRTA’s role in easing the movement? It had too many plans and very little impact or traction on the road.

This had been a very disappointing presentation by C-BRTA, as cross-border travel was an important subject which fellow South Africans saw and read about every day. The impact of C-BRTA was minimal, if any. The Committee must oversee such issues as smart vehicles and smart law enforcement etc. during their oversight visits

No further questions were asked by Committee Members.

C-BRTA's response

Mr Mboyi confirmed that the ICMBS had been under development and was now in its final stage before being launched in August 2021. He acknowledged that the current system was sometimes susceptible to abuse and corruption.

Regarding smart law enforcement and smart vehicles, the trend was that C-BRTA had to move with the times and look at some of the smart tools to promote compliance and efforts on law enforcement. C-BRTA carried this responsibility in their Act, and had remain accountable for this responsibility. The smart vehicle had been acquired and deployed to the Limpopo Corridor and the Beitbridge, with much success. It had assisted in identifying cloned vehicles, vehicles operating without permits, and vehicles not properly registered. It had broad capabilities to root out these elements from South African roads. Appreciation had been received from the SAPS and the RTMC for the tools that had been developed by C-BRTA. It aimed not to lose revenue because of people using illegal permits.

C-BRTA had to comply with the Road Traffic Act (RTA), and its responsibilities as outlined by the Act. It had been extensively involved in operations on the borders to help alleviate border challenges. He gave an example of the blockade at the Beitbridge. Some of the challenges faced on the borders were not just transport challenges. For instance, there was the movement of people through the border-gate, where Home Affairs was involved to check that when people crossed the border, they had the necessary documentation, and where trucks could not move without SARS first clearing them. In some cases, there were special operations by the security cluster. Therefore, various stakeholders were critical for the ease of movement across the border. It was not just a transport responsibility. The C-BRTA did consult with stakeholders on behalf of its clientele. Teams were tasked at the border to co-ordinate meetings with various stakeholders.

Mr Nchaupe Maepa, Chief Operations Officer of C-BRTA, confirmed that OCAS had been a C-BRTA project for quite some time, and since 2018/19 it had developed a registration module and have piloted it with different operators who had expressed interest. It had since refined the registration module with the outcomes of the pilot. C-BRTA wanted to develop the rest of the modules, such as the accreditation and auditing modules. It intended to fully implement OCAS in the current five-year cycle. The registration module had been started, and the rest must still follow.

He confirmed that C-BRTA did issue permits to tourism operators. It had developed a strategy which looked at the cross-border space. This was analysed to where it was linked to the original strategy, where C-BRTA would work with member states to provisionalise law enforcement in the cross-border space. Engagement would be made with member states.

The road safety strategy was zooming in on the cross-border space, and focusing on cross-border vehicles and cross-border local operators. The law enforcement officers which were dispatched to the Beitbridge border indicated why it was important for C-BRTA to continue to work on law enforcement from a profiling perspective. Through smart law enforcement, intelligence could be gathered, and the C-BRTA uses the information collected from the RTMC to profile operator conduct and make sure that only those who were compliant were issued permits, and that those not compliant would be dealt with differently to enhance compliance.

Mr Mangcu asked about C-BRTA’s role or participation as an economic regulator. Considering the current legislation tabled in Parliament, how did C-BRTA see its role in the light of economic regulation?

Mr Mboyi responded that C-BRTA’s reference to economic regulation was more about granting access. C-BRTA issued permits and granted access through particular permits. It had had a meeting in March with the DoT on the issue of interface, and would further hold meetings.

The Chairperson thanked the C-BRTA for their presentation and their responses to the questions posed.

South Africa Maritime Safety Authority (SAMSA)

Ms Nthato Minyuku, Chairperson of the SAMSA Board, said that SAMSA had prepared a presentation on its background and strategic annual performance plan and challenges.

Ms Tsepiso Taoana-Mashiloane, Acting CEO of SAMSA, said the South African Maritime Safety Act, 1998 (Act No. 5 of 1998) was the enabling legislation which had established the Authority and detailed its mandate objectives. This had been expanded in 2007 to include the regulation of marine activities on South Africa’s inland waters. It was therefore given the responsibility for administering inland small vessel regulations, which included the activities of inland water vessels' inspections, licensing, surveying, safety promotion and awareness, accident investigation, development of examination standards, certificates of competence, and being the authority to award certificates of fitness.

SAMSA was also responsible for monitoring the activities of sea going vessels traversing South African waters, providing maritime search and rescue services, and ensuring safe navigation at a distance through the Maritime Rescue Coordination Centre (MRCC).

SAMSA’s responsibility extends to 3 000 Km of the Republic`s coastline, and a current economic exclusive zone (EEZ) covering 1 553 000 sq km. There were nine commercialal ports where it had to ensure the safety of vessels and the prevention of pollution by ships. It had a search and rescue region of 27.7 million sq km. Just under 10 000 ships visited South African ports each year, with 240 000 seafarers on board and carrying 300MT of freight (imports and exports), with 90% of SA trade by volume.

There were five board members of SAMSA, three of whom were female. The Deputy Chairperson post was vacant.

SAMSA’s two key strategic alignment areas with government priorities were social cohesion and safe communities, and economic transformation and job creation.

2021 had been a financially challenging year for the Authority as, like most other organisations globally, it had been negatively affected by the Covid-19 pandemic. For the first time in the past three years, it had reported a deficit of R29.7m. This was due to the significant decrease in the number of vessels calling into South African ports. The following trends and results had been observed during the year:

  • A significant drop in ship volumes due to the Covid -19 restrictions that had resulted in a decrease in global trade activities. The drop in volumes had had a negative impact on the SAMSA levies, which contributed 77% of its total revenue. The statistics also indicated and 11% decrease in the SAMSA levies' average rate per ton.
  • The unfunded SA Agulhas had continued to incur cost without generating any revenue. To date, SAMSA had not received any revenue from this asset, but it had incurred R15.03m in operational costs.
  • The delayed approval of levies had resulted in an estimated potential opportunity loss of about R68.2 million. The approved tariff increase for 2020/21 was implemented only on 1 September 2020 instead of on 1 April. The timeous approval of the tariffs continued to be a great challenge for the organisation, as delayed approvals directly impacted the revenue and surplus line.

SAMSA had tried to put measures in place to combat the negative impact of the significant decline in revenue. These measures were already noticeable, as some expenditures had shown a decrease.  This had not been sufficient to eliminate the deficit position, however. To date, SAMSA had incurred R403.85 million in operating costs, which was 24% below the budgeted operating costs of R531.15m. The saving on costs could be attributed to the Covid-19 pandemic, which had suspended most trading and travel activities, and the deliberate effort that had been made by the SAMSA staff to save on costs, such as use of consultants, advertisements, stationery, etc.

Some of the key strategic challenges and mitigation actions included maritime enforcement resources, where the entire capacity to respond to incidents lay outside the control of SAMSA. This included the emergency tug, pollution control vessels and helicopter capabilities, and remained a huge constraint on the effectiveness of the maritime safety and pollution capacity of SAMSA. The proposed mitigation action was a complete SAMSA funding model developed and implemented to ensure alignment with the mandated requirements of the Authority. The key stakeholder to implement would be the DoT, which needed to implement the 2019 SA Maritime Risk Workshop resolutions. National Treasury and the DoT must be encouraged to attend to the issue of the turnaround on the approval of the levies

Other key strategic challenges and mitigation actions include the fact that SAMSA had had no permanent Chief Executive Officer for more than five years since 2016, where the proposed mitigation action had been the appointment of a permanent CEO, with Cabinet to assist in attending to the issue as a priority.

To improve the financial performance of the entity, the executive committee (EXCO) had adopted a cost containment strategy that would assist in the continuing efforts to reduce costs. SAMSA was also awaiting a response from the DoT on the 5% tariff increase application. The approval of the additional tariff increase, combined with a robust cost containment plan, would assist the Authority to deliver on its mandate adequately.  

SAMSA had received a qualified audit opinion for the 2019/2020 financial year. A slight improvement had been noted, as it had been able to reduce the qualification paragraphs from three to one. The qualification paragraph was related to the accounts receivable, where AGSA had raised concern that they were unable to obtain sufficient and appropriate audit evidence to account for unknown deposits.

A detailed analysis performed by SAMSA's finance team concurred with the root causes identified by the AGSA in their audit. These were:

  • A lack of a reliable financial systems and adherence to internal controls;
  • A knowledge and skills gap within SCM and finance;
  • Lack of adequate policies and procedures throughout the Authority;
  • No uniform processes across the different regions; and
  • A lack of accountability, performance and consequence management.

In response to AGSA's recommendations, the following steps had been taken:

  • An action plan addressing all internal and external audit findings had been developed and was being monitored at the EXCO level;
  • SAMSA had finalised the internal audit plan. The plan focused on the areas identified as critical and high risk, which was to ensure SAMSA's audit readiness;
  • The finance team had developed a detailed methodology on the unknown deposits qualification. The methodology had been provided to the internal audit for review and discussed with the AGSA. AGSA's interim audit on receivables (unknown deposits) was scheduled for early May;
  • There had been investigations into the irregular, fruitless and wasteful expenditure to ensure that accounting and consequence management was implemented.
  • A review and development of policies and procedures, where applicable, had been initiated through the Quality Management System (QMS) project.

What SAMSA asked from the Portfolio Committee on Transport was:

  • A special fast-tracking initiative of outstanding maritime legislation into the Parliament programme;
  • Support in the implementation of the strategic initiative (including funding) to develop South Africa’s maritime domain awareness and emergency response capability. The support required would constitute establishing forums for Parliament's stakeholders across all core areas of engagement; and
  • Support by creating awareness among domestic and international business communities of the implementation of the South African ship registration strategic initiative.

Some of the key issues raised in previous engagement with the Portfolio Committee included:

Maritime infrastructure and legislation challenges

The key strategic challenges include maritime enforcement resources, such as an emergency towing vessel, outdated and slow ratification of legislation, and communication infrastructure for SAMSA's Sea Watch and Response, all of which had been escalated to the Minister of Transport.

Maritime awareness programmes and projects

These include the provision of education, training and skills development, such as the provision and/or facilitating of access to bursaries for maritime high school learners, the establishment of the SA International Maritime Institute (SAIMI), basic education awareness programmes in partnership with Sci-Bono, the provision and/or facilitation of bursaries and scholarships for the Durban and Cape Peninsula Universities of Technology (DUT and CPUT) students and Masters/Doctoral students at the World Maritime University of Vietnam.

Maritime technical workforce challenges

The country has not been able to produce enough maritime technical skills over an extended period of time. However, SAMSA was collaborating with Transnet and industry to provide training berths for cadets, to try speed up the production of the country’s technical capacity. SAMSA had managed to minimise the impact by keeping retired employees in its ranks – at a cost -- while continuing to bring in young blood.

Discussion

Mr Sithole said that this presentation had been shocking, as there had been no improvement for four years. What system did SAMSA now have in place? For four years, it had received adverse audit opinions. The lack of a permanent CEO was of a concern. Since 2016, this post had not been filled, which was shocking. SAMSA had failed to implement the risk management policy of their entity. He was worried that a lack of accountability, which did not exist. Did SAMSA have a timeframe for when the entity would be fixed?

Mr Chabangu asked why SAMSA still did not have a permanent CEO. He said 14 citizens who had arrived in South Africa had tested positive for Covid-19, and asked if they were not tested before they arrived in the country? What was SAMSA’s working relationship with other countries regarding the Covid-19 pandemic, as part of safety?

Mr Mangcu commented that this had been a disturbing presentation. Did the audit report and action plan suggest that there were no audit reports for 2021/22? The presentation had mirrored the same presentation which had been presented to the Committee in September 2019. During this time, SAMSA had reported to the Committee that there were high incidents of unknown deposits and a lack of follow-up on debtors. It had mentioned that the system was lacking controls. It appeared that there was no focus in terms of audit issues. What was SAMSA’s role in the registration of merchant vessels, or whatever they were called? What was the cause of the lack of job creation at SAMSA? He emphasised that this had been a disappointing presentation, as there had been no sign of improvement.

SAMSA's response

Ms Minyuku acknowledged that there had been four years of no audit outcome improvements.

The issue of the permanent CEO vacancy was of importance to the Board of SAMSA. It had started a recruitment process, which was now closed, and were in the process of finalising the recruitment process to appoint a CEO this year.

Ms Taoana-Mashiloane said the lack of accountability and past qualified opinions were of concern. She had been appointed after the former acting CEO of SAMSA, who had been in the position for the past four years. She said the action plan in place had been presented in part, in September 2020. SAMSA was governed by the Public Finance Management Act (PFMA). The organisation had been doing things outside the prescripts of the PFMA, and SAMSA was focused on this. The Board was working hard to improve the situation in which the entity finds itself. Accountability was one of the key issues to be addressed.

SAMSA was trying to enhance its performance management system so that wherever there was a transgression, or a lack of adherence to standard operating protocols, those responsible were held accountable for any under-performance as a result.

She agreed that SAMSA was lacking mitigation strategies, but it was now emphasising mitigation strategies, particularly in supply-chain and procurement issues. Some of the systems were old, and SAMSA had to move to a digitised system.

Ms Zamachonco Chonco, CFO of SAMSA, referred to concerns over the lack of consequence management and accountability, and agreed that SAMSA had not shown any leadership in those specific areas. There had been dismissals, specifically in the SCM area for non-compliance with SCM regulations. SAMSA staff had been taken through detailed training, assisted by the National Treasury, and letters had been issued stating that failure to implement the training would result in firing. This was a final warning.

Unknown deposits had been an issue for a while. These involved deposits made to SAMSA’s account where the referencing did not match what they had on the system, and this had required investigation. The AG had queried why management had not investigated the unknown deposits. SAMSA had responded by going through each and every transaction under "unknown deposits," to establish what these deposits were relate to, and what service had been rendered. It had investigated all 6 000 transactions individually, and had presented the findings to the AG for review. It had consulted with municipalities that had the same problem. SAMSA had done sufficient work in checking the unknown deposits, and was still waiting for a response from the AG. This was the only area which had resulted in a qualification.

Ms Minyuku responded on the positive tests for Covid-19 at Maydon Wharf in Durban involving a Filipino crew that had come from India. The crew had tested negative when they left India, but had tested positive when they arrived in Durban.

Captain Vernon Keller, Deputy Chief Operations Officer of SAMSA, explained that when a vessel arrived in port, the port health authorities would go on board and would set up a testing centre for testing. SAMSA would monitor international regulations, and the International Maritime Organisation (IMO) would also communicate any latest developments in terms of Covid-19 to all industry players that came to South Africa by sea. SAMSA played an oversight role, and would monitor the actual crew in terms of welfare. Once the issue had been cleared by port health, SAMSA would board the vessel and conduct a port inspection and would look at whether the vessel complied with international conventions.

He added that if a vessel passed through South African waters, the Maritime Rescue Co-ordinating Centre would be responsible for search and rescue involving any medical emergencies on board.

Ms Chonco said that SAMSA was currently in the 2021 financial cycle, and it had not received any report yet, as they were still being processed. The results in the presentation related to the 2020 financial year. The audit for 2021 was on the way, and the AG would audit the action plan that SAMSA had put in place to resolve the audit findings which had been raised in 2020. The plan itself looked at all the internal and external audit findings that SAMSA had raised. The majority of the findings involved looking at irregular expenditure. On the system for finding the issues raised by the AG, SAMSA had worked with its internal auditors to resolve some of the findings, the majority of which required it to re-look at the ICT systems that they were using. With ICT issues, time constraints were an issue.

Ms Taoana-Mashiloane noted that the jobs that SAMSA envisaged creating were those that were centred mostly on the Maritime Youth Development Programme, where the cruise industry was emphasised. SAMSA was working closely with the cruise industry, such as the MSC shipping company, where youths were taken on board and received training to hone their skills. This had been done before Covid-19, but with the pandemic now, SAMSA had been unable to continue with the programme. It was still hopeful that with the cruise season of 2021, at least 200 of the youth jobs would be created again.

There was an MoU with the DoT for SAMSA to implement job creation programmes, but SAMSA also needed to afford people skills through their skills development programmes. Seafarers were afforded training, and must first qualify to be seafarers if they did not have the necessary certification and sea time. This sea time was part of job creation, and with the lack of operations on the SA Agulhas, SAMSA could not afford sea time for its own seafarers. This was something on which SAMSA was engaging its bilateral with different countries in order to give it training opportunities.

Regarding the role of SAMSA, it was the registrar of ships on the South African ship register. It had a number of fishing vessels, especially in Cape Town, where those vessels were also registered. Ships were registered in order to know who was in South Africa’s waters, and so they could be monitored. SAMSA needed to grow the South African ship register. A tax regime must support its ship register. This tax regime could attract foreign vessels to register their ships in South Africa, and the more SAMSA was able to grow its register, the more it would be able to create jobs by offering young people the opportunity to be seafarers on those vessels.

Regarding SAMSA’s transformation, at an organisational level it had employment equity plan. There were two female executives out of seven, where the balance was supposed to be a 50/50 split. Looking at the management component, there was a balance between the male and female occupation split, and historically disadvantaged individuals (HDIs). SAMSA recognised that there was slow transformation in the maritime industry. As a measure to address this, it was engaging in awareness programmes, where people were given skills to grow their businesses in the maritime industry. It was working towards getting SMMEs on board when it came to transformation in the maritime industry.

The Chairperson commented that SAMSA could see that Committee had not been impressed by what they had heard. He acknowledged that the results of the audit which was due may be better than the entity's previous audits. He asked how long the Board had been in place at SAMSA.

Ms Minyuku responded that the Board had been in place since August of last year, and had been in charge for eight months.

The Chairperson said that this was a growing concern. The issues which had been identified years ago were still being presented to the Committee. Up until now, the other entities had been doing very well, except for SAMSA. The Committee would prioritise it, according to the views of the Members. The Committee would like to help, but a change in the entity's results was needed. It would find ways of interacting with SAMSA.

Ms Minyuku responded that with the current Board being appointed in August 2020, and having to deal with the Covid-19 pandemic and everything else challenging SAMSA, it would be a long process where the inefficiencies had to be addressed. She looked forward to working closely with the Committee. She acknowledged the Committee's concerns, and said these were also shared by the board, which wanted to get SAMSA back on track.

The Chairperson thanked SAMSA for their presentation and response.

He thanked the Committee for the work done so far, and for their thorough engagement with the entities.

The meeting was adjourned.

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