Roads Agency Lim­popo Over­achieves on Small Busi­ness De­vel­op­ment and Labour Tar­gets


Mmileng - - Contents -

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.


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.

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