Roads Agency Limpopo Overachieves on Small Business Development and Labour Targets
ON SMALL BUSINESS DEVELOPMENT AND LABOUR TARGETS
An independent audit has revealed that Roads Agency Limpopo (RAL) has made great strides regarding Small Medium and Micro Enterprises (SMMEs) empowerment, job creation and rural economic development through the successful Strategic Partnership Approach and the Agency’s own infrastructure programmes.
The audit for the Agency’s 2017/18 financial year’s small business development expenditure and labour data targets was commissioned by RAL and focused on all the five district municipalities of Limpopo Province, namely Capricorn, Mopani, Sekhukhune, Vhembe and Waterberg.
The report revealed that RAL overachieved on all its four Key Performance Indicators (KPI) against targets set in its Annual Performance Plan (APP):
• RAL had set an annual target of creating 457 full time equivalent (FTE) jobs as per the APP. The audited performance revealed that
553 FTE jobs were created for the four quarters (Q1-Q4) of 2017/18, an overachievement by 96 FTE jobs.
• For amount to be spent on employing labour, including local labourers, the Agency set a target of R25 million for its contractors. The audited expenditure was R33 528 000, an audited overachievement of R8 528 007.
• The Agency also set out to train 480 local labourers in the year ended 31 March 2018. In the end, 548 local workers were trained in this regard, and overachievement of 68 extra workers trained.
• Amount to be paid to SMMEs and other sub-contractors was set at R115 million. The audited amount paid to small businesses was R142 183 523, an overachievement by R27 183 522.
“Since 2015, the Roads Agency Limpopo has intensified the use of road infrastructure as a vehicle for driving local economy, particularly village economy, through the development of SMMEs and creation of jobs in project areas,” noted the report.
In terms of RAL policy, successful contract bidders are expected to sub-contract 30% (on upgrading projects) and 15% (on the maintenance projects) of contract value to small businesses in villages adjacent to the project sites, and 10% of contract value should be used for employment of local labourers in areas where road upgrades and maintenance projects are undertaken.
The policy further states that procurement of SMMEs should be limited to the locality of Limpopo Province with preference given in the priority order of, first to the SMMEs from affected villages, then to those within the local municipality before exploring the district municipality labour catchment area.
Consulting engineers (designers) are also encouraged to design projects that are done using labour intensive activities. This will increase the labour intensity to be above the prescribed minimum of 10%.
Apart from SMME Empowerment, the Agency is also mandated to create jobs and job opportunities in accordance with the Extended Public Works Programme (EPWP) guidelines and the International Labour Organisation (ILO), and to ensure the training of locally-based workers with on-the-job and Construction Education and Training Authority (CETA) accredited training.
Training is also extended to the owners of SMMEs with programmes connected to Financial Management and other related short courses. This is to ensure that local SMMEs understand business principles to better run their businesses and to be well equipped to participate in future projects.
Penalties on contractors who do not meet their SMME development and labour (engagement) targets are calculated at 300% of the difference between the set target values and the actual values achieved by the contractor at the completion of the project.
The report also highlighted opportunities for improvement, including improving support given to SMMEs by the main contractors and to adhere to the 30 days payment period for invoices submitted by SMMEs.
The SMMEs contribute more than 40% of the received payments towards employment of local labour, which indicates that in empowering local SMMEs there is potential of alleviating poverty in the local economy.
“Late payments impact negatively on the cashflow of SMMEs resulting in small businesses negotiating advance payments with the contractors, which comes at a cost to the SMMEs.”
Contractors are expected to send reports on amounts paid to SMMEs, together with EPWP and training statistics reports monthly, on or before the second day of each month. The consolidated audit report, obviously, sought to verify reported figures - resulting in variances - as it arrived at audited outcome.
“ROADS AGENCY LIMPOPO HAS INTENSIFIED THE USE OF ROAD INFRASTRUCTURE AS A VEHICLE FOR DRIVING LOCAL ECONOMY”
Local labourers at work on a road construction project between Legolaneng and Monsterlus in the Sekhukhune district. Roads Agency Limpopo, through its contractors, has equipped an impressive 548 locally-based workers - most of whom are the youth, women and people living with disabilities - with on-the-job and CETA-accredited training in the 2017/18 financial year.