Cross Border Road Transport Agency 2019/20 Annual Report

Meeting report

Introduction by Chairperson

The Chairperson noted that the meeting of the Select Committee on Transport, Public Service and Administration, Public Works, and Infrastructure (the Committee) is being held to receive a briefing on the Annual Report for the 2019/20 financial year from the Cross-Border Road Transport Agency (C-BRTA), an entity of the Department of Transport. C-BRTA, from the understanding of the Committee, has certain responsibilities around road, or freight-passenger travel in South Africa. C-BRTA ensures that there are regulations that govern the cross-border road transport industry in South Africa. This meeting held was the first meeting of its kind between the C-BRTA and the Committee. Apologies were issued by the Minister and Deputy Minister of Transport, who were both engaged in other meetings, and Mr J Londt (DA, Western Cape).

DOT comments

Mr Chris Hlabisa, Deputy Director-General: Road Transport, Department of Transport (DOT), responsible for roads in South Africa, and the oversight of all road entities in South Africa including the C-BRTA acknowledged the Committee. He introduced some of C-BRTA’s Board Members and its Executive team members. He appreciated the Committee meeting with the C-BRTA and allowing the entity to present its Annual Report to the Committee. C-BRTA’s Board and Executive team members then introduced themselves to the Committee.

Chairperson of CBRTA’s comments

Mr Moss Ramathe, Chairperson of the Board: Cross Border Road Transport Agency, thanked the Committee for meeting with C-BRTA and for the opportunity to present its Annual Report. C-BRTA compliments and supports the DoT and spearheads the process of interstate operations. This process facilitates sustainable, social, and economic development in the Southern African Development Community (SADC). Without transport, there would be no trade, and without trade the vision of an industrialised SADC cannot be realised. He was pleased to report to the Committee that through the sound, effective internal control and risk-management systems in place, C-BRTA achieved a clean audit for the 2019/20 financial year, its fifth successive clean audit.

Cross-Border Road Transport Agency (the CBRTA) 2019/20 Annual Report

Mr Lwazi Mboyi, Acting Chief Executive Officer: Cross Border Road Transport Agency, presented the 2019/20 Annual Report to the Committee. He confirmed that this was C-BRTA’s fifth successive clean audit. C-BRTA exists to improve the cross-border flow of commuters and freight operators who make use of road transport. Its function as an interstate operations agency is to reduce mobility constraints for road transport operators, in the form of regulating market access and issuing cross-border permits, while facilitating sustainable social and economic development in the SADC region.

C-BRTA is proud to have remained the driving force behind the region’s cross-border business focus for more than 20 years. The primary intention of regulating the transport industry is to achieve an unimpeded movement of people and goods across the border. The C-BRTA achieved this through eliminating impediments and constraints to ensure that there is a free flow movement of goods and people across the borders. The passenger transport space is regulated to ensure that supply and demand is mitigated. The freight industry is not regulated but is regularised to ensure that there is a free movement on goods and services across the border.

C-BRTA is responsible for the issuing and managing processes pertaining to cross border permits; monitoring carriers’ adherence to the law by carrying out law enforcement operations; developing partnerships with SADC counterparts and fostering positive relationships aimed at improving transport facilitation and development of trade among SADC countries; and 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.

The position of Executive Manager of Office of the CEO, for C-BRTA remains vacant. A permanent Chief Financial Officer (CFO) was appointed.

To facilitate the unimpeded flow of cross-border transport, the C-BRTA implemented the Market Access Regulation (MAR) tool to the demand and supply of the cross-border passenger transport. The tool was implemented on all the corridors with a view to continuously assess gaps for improvement purposes.

Further to that, a model for the cross-border flow calculator was developed in the 2018/19 financial year and was piloted in two land border posts. During the 2019/20 financial year, the model was piloted on the Trans-Kalahari Corridor.  It is anticipated that once fully implemented, the calculator will provide the cross-border stakeholders with information with respect to the cost of delays at the commercial border posts and be used to make decisions for the investments on the cross-border improvement initiatives.

The C-BRTA has conceptualised and is developing an Operator Compliance Accreditation Scheme (OCAS), which seeks to transform how the cross-border road transport is regulated. Once implemented, OCAS will connect SADC countries through a coherent and harmonised regulatory regime separating compliant from non-compliant operators based on a predetermined risk profiling system thereby promoting safe and reliable transport.

Having completed the National feasibility assessment and drafted Regulations in the 2018/19 financial year, the Agency proceeded and developed the OCAS Registration Platform during the year under review.

C-BRTA achieved great strides in enhancing organisational performance by improving its service offering to the operators. To that extent, C-BRTA issued temporary permits at an average of 99,42% within the predetermined timelines. Long-term permits are also processed within the prescribed governance processes.

To improve sustainability, C-BRTA continued to explore the possibility of introducing new revenue streams. A business case for the commercialisation of information was developed and the implementation as per the project plan is underway.  Furthermore, the levying of cross-border charges on foreign vehicles is being pursued through continuous engagements with various stakeholders including the DoT, Department of Home Affairs, Department of International Relations and Cooperation (DIRCO) amongst other stakeholders. C-BRTA hopes to report in its next Annual Report the progress that it has made on these projects.

Two targets were not achieved in 2019/20. This included the KPI that looked to developing and implementing new revenue streams. Its target was to roll-out a project plan for 'Sale of Information' revenue streams. This was not achieved because of the inability to appoint the Quality Development Facilitator. However, C-BRTA developed a business case for the implementation of sale of information as a revenue stream. The other target that was not achieved was the KPI that investigated developing and implementing new cross-border management systems. The system could not be piloted as intended owing to the Declaration of the State of National Disaster towards the end of the financial year. However, C-BRTA has developed the ICBMS and functionality for the issuing of permits on the new system was demonstrated, which C-BRTA looks forward to reporting in its next Annual Report.

C-BRTA achieved 12 of its KPIs. Amongst the 12 KPIs achieved, C-BRTA managed to develop permit fee regulations, where the permit determination model was approved by the Board and submitted to the DoT during the last quarter of the financial year; implemented scientific tools used by the Regulatory Committee to manage supply and demand of cross-border passenger transport; developed and implemented Operator Compliance Accreditation Scheme (OCAS), where the OCAS Manual Registration Platform was developed and approved; a total of 44 687 temporary permits were processed in the front office during this financial year and 44 580 of those were issued within 8 hours resulting in a 99.86% being achieved; a total of 32 931 temporary permits were issued in the back office, 32 591 of those permits were issued within one day resulting to a 98.98% being achieved for the year under review; section 39 reports were successfully compiled and submitted to the Executive Committee (EXCO) and the Regulatory Committee; implemented a Law Enforcement Performance Monitoring Tool where the law-enforcement performance by the function at the Road Traffic Management Corporation (RTMC) was monitored throughout the financial year and progress report thereto noted by  EXCO on a quarterly basis; develop a model to calculate transit and cost of delays at commercial border posts where the Cross-border Flow Calculator Model was piloted at the Trans- Kalahari Corridor during the financial year amongst other key performance indicators.

C-BRTA saw a slight decrease in the issuance of freight and bus permits for the 2019/20 financial year compared to the 2018/19 financial year. C-BRTA however, saw a slight increase in the issuance of taxi and tourism permits for 2019/20 compared to 2018/19. Permits issued for freight carriers were 62 930, signifying a decrease of 0.1% from 62 995, with the bulk of the permits issued to Zimbabwe, Mozambique, and Botswana amongst other countries. Permits issued for bus operations decreased by 10.1% during the year under review, down from 1999 to 1810, with the bulk of the permits issued to Zimbabwe, Mozambique, and other countries. Permits issued for taxi operations increased by 15% during the year under review, from 22494 in 2018/19 to 26469 in this current financial year. Permits issued to tourist operators increased by 4.1% during the year under review, from 2729 in 2018/19 to 2846 in this financial year. There has been an increase in law enforcement activities for 2019/20. Vehicle inspections are up by 12.3%, prosecutions are up by 4.8% and the compliance rate is up by 1% from 2018/19.

The C-BRTA championed the establishment of the Cross-Border Road Transport Regulators Forum (CBRT-RF) in the SADC region to drive the regional harmonisation agenda.

A National Ministerial Task Team (NMTT) consisting of officials from the National Department of Transport, C-BRTA and the Free State Department of Police, Roads & Transport, was established by the Minister to work on measures of resolving the impasse. A Memorandum of Understanding (MoU) was concluded between the International Cross Border Taxi Organization (ICBTO) and Madiboho Taxi Forum led by Free State South African National Taxi Association (SANTACO). The aim of the MoU was to forge working and operational relations between ICBTO and SANTACO. Since the signing of the MoU, there have been no reports of violence, intimidation, and destruction of property. A draft bilateral agreement between South Africa 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 Linking Africa Plan (LAP) was developed and 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 are 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 the realisation of the objectives of the African Continental Free Trade Area (AFCFTA), Agenda 2063, the Africa we want and various other programmes; and the Plan provides interventions needed to unlock Africa’s trade potential and thus position Africa as a significant trading player in the world economic system. The C-BRTA has engaged various stakeholders to support the implementation of various identified programmes.

The C-BRTA is developing the Integrated Cross Border Management System (ICMBS) to replace the old permit issuing system. The system will go-live in the coming financial year. This will allow individuals to apply for permits anytime and anywhere; improve turnaround times; and allow for online notifications. This system will reduce operational costs for operators and allow for permits to be renewed online.

C-BRTA’s Social Responsibility Initiative hosted a book-collection drive in celebration of Mandela Day. The initiative was intended to promote a culture of reading amongst the youth, since most youth in rural areas has no access to reading material. The books were to benefit the pupils attending the surrounding schools on school projects as well as enable them to be well-versed in general knowledge topics. With this project, the C-BRTA and Chief Albert Luthuli Municipality collaborated to develop and improve the Ekulindeni community where during Youth Month; the C-BRTA staff collected and donated books to Ekulindeni Community Library.  The books were handed over in a joyous celebration on Mandela Day.

Ms Rebecca Hlabatau, Chief Financial Officer: Cross Border Road Transport Agency, noted that as of 31 March 2020, C-BRTA’s total assets increased by 33% due to an increase in intangible assets as it relates to the development of the ICMBS system. This system has not come into operation yet. There was a 28% increase in cash and cash equivalents.

She noted that there was an 11% overall increase in total liabilities in 2019/20. There was a 33% increase in accounts payable due to accruals raised during the COVID-19 lockdown beginning on 23 March 2020. There was a 100% decrease in operating lease liability in 2019 due to the expiration of the Menlyn Office lease in January 2020. The C-BRTA moved to the new building in June 2020.81% of C-BRTA’s revenue comes from permit income. There has been a 36% overall decrease in revenue outcomes due to the write back of prescribed claims from before 2015 in 2019. There has been a 3.0% overall increase in expenditure. There has been an 18% increase in administration fees to RTMC due to more inspections being carried out as compared to that of the prior year (16% year-on-year). There has been a 9% decrease in goods and services due to cost cutting measures implemented by management in 2019/2020, mainly relating to travel and accommodation as well as consulting services. There has been 5% increase due to the Consumer Price Index (CPI) adjustment in the permit rate card effective from May 2019.

She noted that C-BRTA has achieved a clean audit for 2019/20, for the fifth successive year. The Auditor-General (AG) concluded that C-BRTA’s financial statements present fairly. In all material respects, the financial position of the entity, its financial performance and cash flows for the year ended. There were no material findings on the usefulness and reliability of reported performance information. There were no material findings on non-compliance with applicable key legislation. There were no significant deficiencies identified in internal controls. Regarding the investigation being conducted by the Accounting Authority relating to the alleged conduct of the CEO, the AG, indicated that this investigation was still ongoing.

Discussion

The Chairperson commended C-BRTA for five successive years of clean audits and for C-BRTA’s 2019/20 Annual Report presentation.

Ms B Mathevula (EFF, Limpopo) asked what the C-BRTA’s plan is in making sure that cross-border road transport and travel is safe and reliable. The vacant post of the Executive Manager of Office of the CEO is a concern to the Committee. When will this post be filled? What is the impact that xenophobia has in cross-border road transport and what is C-BRTA’s plan in dealing with instances of xenophobic incidences, when they arise? What is C-BRTA’s plan in making sure that inspection and verification is expedited especially at the border(s)? Corruption at the borders is a concern to the Committee. How many people have been arrested in connection with corruption at the borders? What measures has C-BRTA put in place to combat corruption on those borders? What is C-BRTA’s plan on addressing the geographical landscape of the region especially countries that do not have access to maritime transport and trade?

Mr M Dangor (ANC, Gauteng) commended the C-BRTA for enabling and facilitating the free movement of goods in the SADC region and for implementing the AFCTFA. In facilitating this agreement, how will C-BRTA make up for revenue lost, due to permits being changed from a South African permit to a SADC permit? What is the definition of Law Enforcement? What is the influence of outside powers such as the United States, and the United Kingdom on sanctions on countries such as Zimbabwe and how does this impact on the free flow of goods and South Africa’s relationship therein?

Ms M Moshodi (ANC, Free State) commended the C-BRTA for achieving a clean audit in 2019/20. She asked Mr Ramathe, Chairperson of the Board of C-BRTA, how many women are serving on C-BRTA’s Board of Directors, considering gender parity? She reiterated that the vacant post of the Executive Manager of Office of the CEO is a concern to the Committee. C-BRTA must fill this position and the gender parity must also be followed. What strategy is put in place in terms of the red-tape in C-BRTA?

Mr T Brauteseth (DA, KZN) asked why the CEO of C-BRTA and two additional Executive Members of C-BRTA were placed on precautionary leave/suspension. What were the circumstances and developments in this regard? Per the report, on the commercialization of information, there was an inability to source expertise to assist with the development of cross-border curriculum and registration for the training academy. What were the challenges in obtaining this expertise and the development thereof? The vacancies at the upper-management level apart from senior-management are at a 50% level. The vacancies are low for semi-skilled and unskilled workers. He is concerned because it seems that C-BRTA has a lot of junior members and not many senior members. “And I am assuming that senior members mean experience, leadership, guidance, wisdom, and it concerns me that that’s a problem”. Could C-BRTA please clarify why this is the case?

Mr M Rayi (ANC, Eastern Cape) commended the C-BRTA for five successive years of clean audits. He asked how long the CEO and two additional Executive Members of C-BRTA had been on suspension and what the reasons for their suspension are. What expenses has C-BRTA incurred because of the suspensions? The vacancy rate of 38% is a concern to the Committee. C-BRTA must have performance indicators around issues of vacancies, and its performance, so that management and the Board of C-BRTA may monitor these indicators around the performance of C-BRTA.

The Chairperson asked about the impact of the Covid-19 Pandemic and how the pandemic impacted C-BRTA’s ability to generate revenue from permit fees, considering the hard-lockdown? What has Management done to mitigate the effect of the pandemic on its revenue?

C-BRTA response

Mr Mboyi responded by saying that a few stakeholders made effort to ensure that there is a minimum impact on the number of foreign vehicles coming through the borders of South Africa. Over time, C-BRTA has seen that the number of incidents has reduced and there is now better collaboration between the South African Police Services (SAPS) and C-BRTA and the security cluster in general. C-BRTA has signed a MoU with SAPS to have specific SAPS employees work with C-BRTA on various issues. He gave the example of where C-BRTA visited the Limpopo border in the company of certain senior executive members of SAPS. This collaboration has taken shape to prioritise the safety of commuters at the border and for C-BRTA and SAPS to work together.

He noted that C-BRTA is working with the DoT to work on some of the issues where vehicles on the road are safe and adhere to safety standards and that there are specific road traffic conditions that are applicable to its operations. Law enforcement plays a key role. Previously, C-BRTA used to have a law enforcement unit, which was subsequently transferred to RTMC. Currently, C-BRTA has no law enforcement unit on the ground. However, C-BRTA works with RTMC on the deployment of officers and operations to ensure that those people on the road, are supposed to be on the road and that the vehicles that they drive are supposed to be the vehicles that they drive. C-BRTA has evolved its road safety strategy together with RTMC.

He responded to the question of the filling of vacancies. He confirmed that there have been vacancies at C-BRTA. C-BRTA is in the process of filling certain Executive positions. To date, the CFO position, and Company Secretary position of C-BRTA has been filled. Currently, the C-BRTA is advertising the Executive position for Corporate Services which is in the process of being filled.

There has been a discussion around limiting the impact of xenophobia with various stakeholders. In one of C-BRTA’s cross-border regulatory forum meetings, various stakeholders were invited from South Africa to interact with stakeholders across the SADC region. SAPS were also invited to make a presentation in the same meeting.

On the operations at the border, it is not necessarily the responsibility of the C-BRTA to solve the problems faced at the border. Rather it is a collection of various stakeholders, such as the Department of Home Affairs, the DoT, and the South African Revenue Services (SARS) amongst other Departments and stakeholders. C-BRTA is working together with these Departments and stakeholders to ensure that solutions are found to blockages at the borders. He gave the example of the blockage at the Beitbridge in November 2020, a team was sent out by C-BRTA that worked with both the Provincial and Local Government to resolve the blockage. Occasionally, there are restrictions at the border, particularly with Botswana on Covid-19 tests. A lot of drivers rather prefer to use Beitbridge to instead transit through the region. This can lead to congestion at Beitbridge. Various stakeholders work collectively with C-BRTA to ensure that congestion at the borders is mitigated.

C-BRTA met with stakeholders, departments, SAPS and SARS at the Limpopo border to understand the challenges faced at this border. A queue-management system will be piloted which will assist the borders to limit the number of blockages and manage truck queues that are going through the borders. Once this has been tested, and piloted, he believes that “it will be one of the systems that will assist the country to move forward”.

Regarding corruption and management of corruption across the border, the security cluster has been dealing with this issue quite well to manage the challenges together with SAPS. He noted that he did not have the statistics on the amount of people that were arrested regarding corruption. “A lot of people that are coming across the border with a lot of illicit goods are being arrested”. SAPS can assist C-BRTA with these challenges.

Responding to the issue of permits, C-BRTA does not necessarily see itself as relinquishing the responsibility of issuing permits. The permits that are issued in South Africa, and the permits that other countries issue must have a relationship and align themselves regarding its standards. The permits will continue to be issued in a harmonised manner. There is no question if C-BRTA will do away with permits. C-BRTA is trying to find different ways of generating revenue apart from the issuing of permits.

C-BRTA has not had a direct impact on the foreign powers on the movement of goods and services. The goods that are being moved on the borders have not seen any drastic change to date. The only impact has been COVID-19 and C-BRTA is still dealing with the pandemic’s impact to date. C-BRTA is trying to limit the amount of red tape. C-BRTA is working with SARS’s and its system called ADO is similar to that of C-BRTA’s OCAS-system, so that both systems are brought together for the benefit of operators and business people out there. When commuters move through the border environment, the two systems speak to one another and one is pre-accredited by the OCAS-system and ADO. This is why it is important for the two agencies to work together and make sure that the red tape at the border is limited and reduced. C-BRTA hopes to announce a joint-package together with SARS sometime in this financial year.

One of the stumbling blocks in the commercialisation of information was the unavailability of the specified services which was requested, no entity responded to the Request for Quotation (RFQ). C-BRTA is working together with the Transport Education Authority (TETA) on this issue, as it will allow C-BRTA to generate more revenue as an entity in the future. This is a space of need.

Mr Nchaupe Maepa, Chief Operations Officer: Cross Border Road Transport Agency, responded that C-BRTA is moving away from quantity regulations of permits and quality regulations of permits. On the multi-lateral cross-border road transport accruement, there is going to be one permit issued as opposed to multiple permits issued to different countries. An accreditation screening will be implemented and there are costs associated with this screening, which will generate revenue for C-BRTA. He responded to the training academy question. C-BRTA worked with TETA but received no response. C-BRTA has advertised the tender.

Ms Hlabatau, responded by saying that the impact that the COVID-19 pandemic has had on permit income in 2019/20 is that C-BRTA did not feel the impact that much in 2019/20, as the COVID-19 pandemic hit during the last month (March 2020) of the financial year. However, she confirmed that C-BRTA has felt the effects of the COVID-19 pandemic in the current financial year of 2020/21. In April and May 2020, C-BRTA only generated 31% of the budgeted permit revenue due to the hard lockdown. As the hard lockdown eased, revenue improved to 76% in May 2020. As of the end of December 2020, C-BRTA was able to collect 81% of revenue year-to-date of the budgeted revenue. She also confirmed that C-BRTA received relief from the DoT, a R38.5 million once-off relief payment to assist C-BRTA in supplementing its revenue.

She noted that in the event that C-BRTA has positive COVID-19 cases amongst its employees, it can operate at different premises if its main offices are closed for cleaning and sanitising. During the first quarter of 2020/21, ICMBS was not up and running, however C-BRTA found other ways of generating permits through emails, to minimise contact. C-BRTA employees worked remotely to minimise the impact of COVID-19. The bulk of C-BRTA operators are freight operators who are classified as essential workers.

Mr Ramathe, responded to the question of sanctions by outside states. The effect of this increased the amount of people entering South Africa, which resulted in more passengers having to be transported back to their home countries. As far as the movement of goods, considering the circumstances of what is happening in Zimbabwe, there were lots of goods moved at the Beitbridge and Botswana border’s respectively. This has had a minimal impact on C-BRTA’s business.

He responded that C-BRTA’s Board of Directors has had vacancies for quite some time now. The current Board’s term has expired, and they are serving on a caretaker basis. The Minister of Transport is in the process of appointing a new Board. Currently, there are two female Board Members out of seven Board members.

Prof Jan Havenga, Deputy Chairperson of the Board: Cross Border Road Transport Agency, confirmed that C-BRTA received an anonymous letter that contained various allegations. Following this letter, an investigation was launched, and the CEO at that time, offered to go on special voluntary leave. The investigation outcome indicated that many of the allegations contained in the letter could not be proven, however, there was some prima facie evidence on certain allegations. Later, the CEO of C-BRTA at that time was suspended and charged. This is the situation as it stands.

The Chairperson appreciated the good work that C-BRTA is doing in linking South Africa with the SADC region and the opportunities that will result from the AFCFTA. The Committee expects that this will benefit the C-BRTA. The Committee hopes that C-BRTA will continue its good work.

The Committee postponed the adoption of the minutes of 10 March 2021.

The Chairperson adjourned the meeting.