The Cross Border Road Transport Agency (CBRTA) briefed the Committee on its 2010 readiness and on general operational issues. The newly appointed Chief Executive Officer, who had taken office only three days previously, indicated that the CBRTA had numerous operational challenges, which had been ongoing since its inception in 1999. These included consistently qualified audit certificates, high staff turnover, including turnover of senior staff, outdated information systems and the lack of capacity to carry out its primary tasks. The budget of the entity showed that most of its funds were spent on staff salaries, this often left very little money for operational costs. The Department’s Fifa 2010 Plans included setting up a helpdesk at the borders in anticipation of large number of passenger flows during the World Cup, but although the co-operative relations among the stakeholders were strengthened, there were still problems around capacity, and the fact that the law enforcing Inspectors refused to wear uniforms. Operational challenges included the roadworthiness of the passenger vehicles which often lead to the impounding those taxis and buses. A Board Member briefed the Committee on governance issues, and it emerged that the Board had insufficient capacity to carry out tasks, there was lack of clarity on its role, most of the Board members were unaware of the requirements of the Public Finance Management Act, and there was generally lack of guidance.
Members were grateful that the Chief Executive Officer had been so open about the problems and agreed that they must work with the Agency to address them. They were concerned about the high staff turnover and the continually qualified audit report, as well as the high numbers and costs of disciplinary matters, and asked what steps were taken to address the matters. They also expressed strongly felt that the Department and Board were not performing sufficient oversight and guidance over the Agency. They questioned why the Agency, whilst on the one hand bemoaning lack of funding, had made no applications to increase the tariffs since 2004. They suggested that marketing should be done through the consulates, questioned the lack of resting facilities and the reasons that taxi ranks on the border posts were to be removed, and noted that the Agency needed to brief World Cup Host Cities on numbers of expected visitors. Members urged the Board to put its own house in order, suggested that new appointees should be asked to appear before the Committee, and that the roles needed to be clarified and demarcated, whilst one Member was of the view that the Board should be disbanded for its failure to give strategic direction. They thought the Minister should be invited to a future meeting when the challenges and plans, as well as the issue of the tariff increase, should be debated.
2010 readiness: Cross Border Road Transport Agency (CBRTA) briefing
Mr Sipho Khumalo, Chief Executive Officer, Cross Border Road Transport Agency, said that he only started on his post three days earlier, due to late arrival of his appointment letter, and that although he was not fully up to speed with matters concerning the Cross Border Road Transport Agency (CBRTA or the Agency) as yet, he would try to brief Members, with the help of his delegation.
He briefly went through the CBRTA preamble, and noted that its mandate included providing co-operative and co-ordinated advice, regulation, facilitation and law enforcement, as set out in the CBRTA Act No 4 of 1998. He then touched on the implementation of Strategic Plans and the priorities for 2010/11. He noted that, under the Administration programme, which involved compliance and governance, CBRTA was planning to increase tariffs for permit income, transform itself, and implement change and conflict management. He mentioned that the CBRTA had never had a clean audit since its formation in 1999. The qualified audit was caused by a number of underlying problems such as its outdated Information Systems, improper archiving systems and poor performance management. Mr Khumalo said that it was necessary to be clear upfront about the problems facing CBRTA so as to come up with solutions.
The CBRTA was one of the few entities that did not get any allocation from the Department of Transport (DOT), instead being funded from the tariff funds. Mr Khumalo noted that the main question to be asked was whether the funding model was viable. Other priorities were establishment of regional offices within Southern African Development Community (SADC) to improve CBRTA impact and relevancy in the region. It was necessary to improve law enforcement and traffic flow within the region. Mr Khumalo said that the CBRTA was supposed to seek suitable cross-border road partners in the SADC region, but the countries in the region were looking to the CBRTA for direction and assistance, and the CBRTA had to sort out its own shortfalls before helping those neighbouring countries.
The resource constraints were heavily influenced by the funding model of the CBRTA. The tariff income was only enough to pay staff salaries and perform a few other tasks. The self-funding model posed challenges, and so did the inconsistent penalties imposed at the discretion of the magistrate’s courts. The law enforcement function added financial strain on the Agency. The tariffs had not increased since 2004.
Human capital posed a serous challenge, due to the high staff turnover at senior management level, and that caused instability. Mr Khumalo related that recently he had been told by one of his new colleagues that he hoped that Mr Khumalo could stay in his post for at least 24 months. In the past 11 years, there had been 7 Chief Executive Officers, and this was demoralising for the staff. There were a large number of outstanding industrial relation matters pending at the labour court.
The CBRTA performance was also constrained by its reliance on the obsolete computer equipment. There were no dedicated roadside checkpoints at border posts and inadequate facilities at terminals to cater for increased number of passengers. Mr Khumalo found it strange that the inspectors at the border posts had refused to wear uniforms ever since the CBRTA had come into existence and so these inspectors were not visible at all.
Ms Makhosazana Mvulane, Chief Financial Officer, CBRTA, briefly explained how the revenue generated from tariffs was spent. She said that 50% of the revenue was spent on salaries, while 43% went to goods and services and 1% to depreciation. The revenue was collected from permits and application income, fines, penalties, interest and sundry income. The total revenue was R77 million, based on the tariffs set in 2004.
Plans for FIFA 2010 World Cup
Mr Ronald Stuurman, Legal, Risk and Compliance Executive, CBRTA, said that the Department of Transport estimated that about 400 000 people would visit South Africa during the 2010 World Cup. There would be more cars on the roads and therefore increased traffic flow along major national, inter city and inter provincial corridors. Most African visitors would be travelling by road, but the actual numbers could not be determined.
In regard to historical statistics for road permits, he noted that Malawi and Zambia had significantly more traffic, because the permits for the Democratic Republic of Congo (DRC) were issued through Zambia. The DRC had no bilateral agreement with South Africa. The tourist permits had significantly decreased by 14%, due to the economic recession.
The Law enforcement section had six regional offices for its inspectorate. The staff complement was 74 inspectors and 5 chief inspectors, and the priority ports were Botswana, Namibia, Lesotho, Mozambique, Swaziland and Zimbabwe. The CBRTA was working with the local and provincial traffic offices for joint law enforcement purposes such as overload and control management.
Mr Stuurman then outlined the key operational challenges. The roadworthiness of passenger vehicles was a major challenge along the major corridors, and this often led the authorities to impound these vehicles. The resting facilities along the major routes were inadequate for taxi operators and passengers. The regulatory functions included a dedicated 2010 helpdesk; and permit information would also be made available on the CBRTA website. Operational hours would be extended for issuing of permits during the 2010 Soccer World Cup Tournament.
Ms Nobuhle Ally, Deputy Chairperson, CBRTA Board, addressed governance and operational issues. She noted that some of the challenges facing the board were the filling of vacancies on the board, which allow the board to have adequate subcommittees. She said that for the greater part of 2009 the board operated with only five members. It was intended to speed up the process of Board rotation. On operational matters, the Board had submitted an application for increases in permit tariffs, and the approval of grants to fund the law enforcement function and brand patrolling vehicles. The board was also waiting for the conclusion of the bilateral agreements with Angola, DRC and Tanzania.
Mr S De Freitas (DA) raised his concern with the continually qualified audit reports of the CBRTA.
Ms Mvulane replied that the qualifications were an indication of inadequate control regarding the records of income. The auditors were unable to trace all documentation because of absence of the records. The Archives Act stipulated how records should be kept; but the CBRTA did not have such systems. The auditors were therefore unable to verify all documents. The processes in place did not record all the transactions of the law enforcement section. Law enforcement was a financial strain because the financial model was not suitable for the role law enforcement and therefore the model would have to be revisited.
Ms Ally said that an action plan was in place to address all the audit queries. The systems were in the process of being upgraded.
Mr de Freitas asked about the content of the Bi-lateral agreements with neighbouring countries.
Mr Stuurman replied that the primary need for the bilateral agreements were to regulate the flow of road transport between two affected countries. The underlying objective was trade facilitation in the region. The agreements stipulated the number of mandatory meetings, sharing information on permit application and law enforcement.
Mr de Freitas asked for clarity on the reference to the financial strain caused by the law enforcement role of the CBRTA.
Mr de Freitas enquired why labour relations cases took too long to be resolved and the reason that they landed in labour court, while there should be processes in place internally to resolve such matters.
Mr Khumalo explained that the outstanding court cases were a financial strain. The CBRTA had not previously had a system of archiving all information. Mr Mphatho, the former CEO, had taken the necessary disciplinary process steps, including the Commission for Conciliation, Mediation and Arbitration (CCMA) and the Labour Court processes. However, this took time and money. Sometimes it had happened that an official would fire a junior without going through the necessary steps. He cited an example of an official who was supposed to cancel a workshop with the Taxi Operators that travelled from far away places, but failed to do so, and this resulted in threats by the taxi operators to burn the CBRTA’s building due to the failure to inform them of the cancellation. The official was fired and took the Agency to the CCMA for unfair dismissal. There were only two officials that were suspended, with full pay, by reasons of negligence. One official was given the task of procuring new offices for the CBRTA, but he signed a lease before the offices were properly fitted with the necessary equipment. The CBRTA had to extend the lease on the old premises while the new premises were being fixed. Mr Khumalo said that the whole CBRTA and the Board would have to appear before Standing Committee on Public Accounts to explain this wasteful expenditure, caused by one individual.
Mr De Freitas found it disturbing that the roles of the Board and management were not clearly defined, and asked the reasons for the vacancies on the Board.
Mr de Freitas asked about the existence of a communications or marketing policy for the CBRTA.
Mr Stuurman admitted that nothing much was done regarding the marketing of the 2010 Plan. The Department would use Hon S Farrow’s advice on using the consulates for marketing purposes.
Mr de Freitas asked the reason that there were no resting facilities and steps taken to remedy the situation.
Mr Stuurman said that the resting facilities promoted the free flow of passengers and services. The CBRTA had been negotiating with the private sector to form Public Private Partnerships.
Mr de Freitas felt that the need to remove the existing taxi ranks on the border posts was not clearly explained.
Mr Stuurman clarified that the provision of public transport and ranking facilities was within the competence of provincial and local authorities. He added that the taxi ranks at the border posts often created traffic congestion and security risks.
Mr de Freitas asked for clarity regarding the jump in numbers for the permits issued for the DRC up to 200%.
Mr Khumalo noted that previously, the permits for the DRC were issued through Zambia, until in the following year they were routed directly through DRC. In 2009 there were only 19 permits issued through the DRC, but this increased by 200% in the following year.
Mr H Maluleke (DA) enquired about the reasons for the staff turnover, suggesting that there must be a bigger problem that caused operational challenges.
Mr Khumalo explained that the high staff turnover was caused by a multiplicity of reasons. When the CBRTA was formed in 1999, the CEO was remunerated at the level of a director, and this did not attract competent applicants. The CBRTA did not have systems and processes in place before appointing the staff, as distinct from the Railway Safety Regulator Board, which had started by putting systems in place before appointing its CEO. The CBRTA had to pay its staff from the funds accrued from the permits. The number of Inspectors was insufficient to allow the work to be done effectively.
Mr S Farrow (DA) wished Mr Khumalo a successful tenure in his new post, although it seemed as if he was “swimming against the tide”.
Mr Farrow mentioned that South Africa had consulates in all the neighbouring countries who could be used for marketing the CBRTA.
Mr Farrow found it confusing that CBRTA complained about inadequate funds although it had not applied for a tariff increase since 2004.
Mr Farrow said that the prime responsibility of the Board was good governance, and if an acting Member of the Board was acting as a CEO then there could be conflict of interest. The role of the Board and the executive were different.
Mr Farrow said that all the 2010 World Cup Host cities were unclear about the number of visitors expected for the tournament, because the CBRTA had not briefed them. The cities had to prepare fan parks, accommodation, security and safe parking in advance, especially those who were situated close to borders. He thought that perhaps the Department of Transport was not playing its role of oversight on CBRTA adequately and he wondered if this was because CBRTA was self funded. The ex officio member of the Board representing the Department should be given more teeth to be able to hold the entity accountable.
Mr Khumalo said that Mr Farrow’s comments were appreciated by his delegation and actions would be taken to implement them.
Ms Dlamini said that the Board was partly to be blamed for the high staff turn-over but the Department seemed to ignore the problems within the CBRTA. South Africa had a very long border but the number of inspectors was not enough to control it. The borders could be used to transport illegal goods. Ms Dlamini said that she battled to understand the logic of having an office in Kempton Park.
Mr Khumalo added that the inadequate salaries and the absence of systems and processes were viewed as setting the staff on a path to failure, hence the high turnover. He acknowledged that the number of Inspectors was insufficient and agreed that the site of the CBRTA offices in Kempton Park did not make sense at all.
Mr N Gcwbaza (ANC) applauded the determination of Mr Khumalo and appreciated his frankness in admitting the problems facing the CBRTA. He asked for clarity on liberalising the markets and increasing the tariffs, as it seemed like a contradiction.
Mr Khumalo replied that he knew about the problems at CBRTA even before he was appointed, and accepted the position in the full knowledge of the challenges. The current leadership was determined to solve the problems.
The Chairperson questioned the role of the Board, Department and the former Committee in reversing the staff turnover. The qualified audit report was an indicator that things were not well. The Committee could have used its power to summon any person or body to account about the failure to deliver. She urged the delegation and the Committee to focus on the future, and not dwell on the past. She said that it was necessary to discover and eliminate the problems to allow the turnaround to happen properly. She urged the Board to put its house in order and not focus on operational issues. The staff turnover was symptomatic of a problem with the organisation, not the staff. She noted that the presentation had not specified what role the Board would play in solving the problems in the CBRTA. She doubted the capacity of the board to solve problems. She said that her experience as a Board member of Umngeni Water made her realise that the problem lay not with the officials, but the Board.
Mr Farrow said that the lines were blurred between the CBRTA and the Board, although the Public Finance Management Act was clear on the role of the Board. He was critical of the way in which DOT had treated the CBRTA, saying that it seemed that the Department had used it as a dumping ground for incompetent managers. He suggested that the Board and management should put its house in order before looking at expansionary roles. He cited the example that Inspectors refused to wear uniforms, in order to solicit bribes. The vehicle drivers would not be able to trust the inspectors. He noted that the IT systems needed to be upgraded immediately and branded vehicles should be visible at all times. All border posts should be manned by the officials from the CBRTA and other stakeholders.
Mr De Freitas said that the CBRTA should go back and do some self-examination, should come up with an action plan, and should also brief the Committee regularly.
Mr N Duma (ANC) suggested that the CBRTA should get a cash injection and the Board should account for the funds.
Mr D Poho (COPE) suggested that the Board should be dismissed, because it had failed to give direction to this strategic entity. The CEO could have the necessary enthusiasm, but the conditions could be totally against him.
Ms Ally mentioned that it was the first time she was appearing before the Committee. Only two Members of the Board were conversant with the PFMA, whilst the rest came from the private sector. That often led the Board moving from two totally different premises. The understanding of the Government developmental agenda was non existent in other Board members. She would relay the Committee’s message to other Board members. She understood the sentiments of the Committee regarding the CBRTA. However, the Board was not even given a proper induction. She agreed that it was vital that the CBRTA work properly, because it was critical for freight and human traffic across the borders.
The Chairperson concurred with Ms Ally, and agreed that it was regrettable that some people would sometimes be appointed to be Board members but not add any value because they had no skills and capacity. She indicated that she knew that some people would lobby their proxies to nominate them, so that they could get the stipend to supplement their income. The Committee represented the tax payers and the broader citizenry. When Committee Members, from whichever party, raised issues the Board, then the Department should take them seriously. The Committee would invite the Minister to deliberate with the Agency.
The Chairperson was critical of the fact that new Members were given alarm clocks as presents, when the Agency could not afford new computers. The decision making process left much to be desired, and the right priorities were not followed. She assured the delegation that the Committee would go to the root of the problem and ensure that the CBRTA’s budget allocation was properly given
Mr Farrow suggested that the candidates short-listed for the Board should appear before the Committee.
Mr Farrow asked whether the CBRTA had applied for an increase in the tariffs.
Mr Khumalo thanked the Committee for nipping the problem in the bud. He was delighted by the promise to invite the Minister to the next interaction between the Department, CBRTA, the Board and the Committee.
Ms Ally thanked the Committee for its input.
The Chairperson suggested that the question on the tariff increase should be shelved until the meeting with the Minister.
Consideration of Committee Minutes
Mr Farrow said that the manner in which the minutes of 3 and 16 March and 12 April 2010 was shocking. The spelling must also be sorted out.
The Chairperson said that the adoption of the Minutes should stand over to the next meeting. Members agreed.
The meeting was adjourned.
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