New SANRAL policy pushes transformation in construction and engineering sectors

SANRAL aims to be a catalyst for the emergence of businesses owned by women, black South Africans, military veterans and youth

SANRAL aims to be a catalyst for the emergence of businesses owned by women, black South Africans, military veterans and youth

The final version of a new policy adopted by the South African National Roads Agency SOC Limited (SANRAL) that intends to reshape the construction and engineering sectors will now be submitted to Cabinet for approval.

The draft Transformation Policy sets clearly defined targets for the participation of black contractors, suppliers and professionals in all projects and procurement commissioned by SANRAL.

The national roads agency’s CEO, Skhumbuzo Macozoma, said: “The transformation policy underlines that SANRAL can help to build a capable and developmental state, and drive economic development through the provision and maintenance of critical infrastructure.”

The new policy also states that SANRAL will reserve contracts valued below R50m exclusively for black-owned businesses.

“Through our procurement and supply chain processes, we can break down monopolies, transform the construction industry and advance the broad participation of black-owned enterprises,” Macozoma said.

He said the agency remains committed to expanding the participation of black-owned enterprises beyond the requirements set by existing legislation and industry charters, while ensuring that it is within what is legally allowed.

The final version of the policy provides for the phasing in of black ownership requirements over four years – moving from an initial 35% ownership to 51% at the end of the period, from the date of Cabinet approval of the policy.

The draft Transformation Policy is informed by SANRAL’s transformation framework, as set out in Horizon 2030, the agency’s new long-term strategy.

The first draft of the policy was unveiled in September 2017 by the roads agency after being approved by its board.

Macozoma said the final version was presented to Minister of Transport Blade Nzimande following an extensive consultation process with stakeholders, which included national and provincial government departments, the engineering and construction sectors, existing suppliers and contractors and labour.

This was done through agency roadshows and briefings held in all nine provinces over a four-month period.

The constructive feedback was incorporated into the final version, said Macozoma.

“We addressed some of the concerns that were raised about how our policies would impact the broader construction sector – but also welcomed the broad acceptance of our commitment to transformation.”

The draft Transformation Policy will apply to all aspects of SANRAL’s activities – from large construction projects and road rehabilitation and maintenance, to operations and professional and consultancy services.

“SANRAL has a wide footprint across the country,” Macozoma said. “Our policies and processes can really be catalysts for the emergence of businesses owned by women, black South Africans, military veterans and youth – to the point where they can compete on an equal footing with established contractors.”

A key feature of the policy is SANRAL’s commitment to facilitate the training and development of emerging contractors. This will enable these smaller businesses to achieve higher gradings from the Construction Industry Development Board, thus expanding their ability to participate in major construction tenders.

SANRAL will also help level the playing field through empowerment agreements with suppliers of construction materials and equipment. This will further help break down monopolies in the supply chains of equipment, materials, technologies and services, and ensure the broad-based participation of black South Africans.

The empowerment agreements will ensure that there is space for emerging entities to secure and supply such materials and equipment for SANRAL projects.

These agreements will include measures to benefit local communities if such supplies are sourced locally.

The agency said it was committed to the protection of the environment, which is a priority in all its projects.

Another way to ensure the entry of black-owned entities in the areas of manufacturing, distribution, installation and maintenance, is promoting the supply of innovative materials for SANRAL roads through the agency’s empowerment ventures.

Primary contractors who tender for SANRAL work will have to submit their own transformation and training policies as part of their tender submissions, according to the draft Transformation Policy.

All opportunities below R100m will allocate black real estate and property developers to entities that are B-BBEE contributor level 1 or 2.

The policy also sets limitations on the number of tenders that can be allocated to a single entity, at both national and provincial levels. The maximum number of tenders that can be awarded a single entity will be limited to three per province but cannot exceed 15 nationally per SANRAL financial year.

For entities that are based only in one province, the maximum number of tenders that can be issued will be five per SANRAL financial year.

In the policy statement, SANRAL said it recognises the critical role the agency plays in the construction and related industries. “[SANRAL] is mindful of the impact the construction industry and its procurement has on millions of people across South Africa, in terms of business and job opportunities.”

It also said that it accepted the responsibility of maximising the participation of black entities in all SANRAL projects by “capitalising on the provisions within the prevailing legislative and regulatory frameworks”.

With reference to this policy, “black” encompasses all previously disadvantaged groups, with specific reference to African, coloured and Indian race groups.

“We are confident that through our draft Transformation Policy and new long-term strategy – Horizon 2030 – SANRAL can contribute to economic growth, job creation, development and the empowerment of our citizens,” Macozoma said.