SPEECH (NOTES) BY KWAZULU-NATAL MEC FOR TRANSPORT, COMMUNITY SAFETY AND LIAISON MR. BHEKI CELE AT THE FREIGHT EMPOWERMENT SUMMIT AT THE GOLDEN HORSE CASINO, PIETERMARITZBURG ON THURSDAY, 28^th JULY 2005

The success of our country’s endeavours is evident in the strong economic growth our country is experiencing. Although much has been achieved, it is only fair to admit that our endeavours to fast track development need to increase, as many of our previously disadvantaged communities still remain impoverished as a result of factors such as unemployment.

One of the objectives of the KwaZulu-Natal Department of Transport is to identify opportunities within the transportation industry, and particularly the freight sector, for enterprise development and job creation in order to facilitate access to skills and capital for emerging enterprises.

The vision of the KZN Department of Transport is, “Prosperity through Mobility”. This means that all the activities of the department, and the manner in which the department delivers services to communities, are aimed at increasing the wealth and quality of life of all the citizens of our province.

In order to create and sustain quality jobs, the freight industry must stimulate an increase in black participation in ownership, management and employment in this sector throughout the value chain. Emphasis must be placed on the development of new and existing businesses.

To make this a reality, we have developed strategies that will be directed at empowering these enterprises by increasing their access to skills, capital and opportunities. This will revolve around maximizing employment opportunities and as part of our strategies, we will use labour intensive methods wherever economically viable

The development of SMME’s has been identified as one of the pillars for economic development, to sustain reconstruction and development. These enterprises provide the utility tool required to address the challenges of job creation, economic growth and equality in South Africa.

We can draw upon the wealth of experience and evaluations of other countries where SMME’s are playing a critical role in absorbing labour, penetrating new markets and expanding economic growth through innovation and creation. The South African economy is typified by big business domination, monopolistic ideals and constrained competition resulting in an unequal distribution of wealth.

Therefore, the main focal point of this Summit today will be on the establishment of Micro and Small business ventures that will be able to create employment for Survivalist enterprises. The vision of the Summit is that these Micro and Small business ventures will grow into Medium sized operations over time.

The strategic objectives of the KZN Department of Transport in this respect are as follows:

• To increase the extent to which previously disadvantaged individuals participate in ownership and management of enterprises;
• To provide access to skills training, economic activities and infrastructure in order to create sustainable jobs;
• To stimulate economic growth;
• To strengthen the cohesion between small enterprises;
• To level the playing fields between large and small enterprises; and
• To promote access to finance.

A. Rail Transport

• The KwaZulu-Natal branch line network has nine clearly defined railway lines. Passenger services are no longer offered on these lines and since 1980 the freight tonnage carried has reduced substantially, from over 8 million tons to 2.5 million tons in 2002.

• This is a total cargo drop of 72%. The cargo lost by rail rapidly transferred onto road mainly due to increased road vehicle size, aggressive competition from the deregulated road haulage industry, large increases in private distribution fleets, and the poor state of rail infrastructure.

• The reduction in rail traffic has also reduced the number of opportunities for small and medium sized enterprises in the rural areas, to participate in the supply chain of commodities, as the large centrally controlled fleets of heavy road vehicles now in operation, usually carry out the entire distribution operation.

• As part of its initiative to revitalise branch lines, between 22 April 2003 and 9 June 2003, we consulted twelve Rural Road Transport Forums to solicit their views on:

1. The utility and future of the branch lines existing in their respective districts; and
2. Potential SMME opportunities associated with these lines.

• The feedback from these meetings was universally positive towards revitalising the branch lines and the creation of opportunities for SMME’s in the process.

• The revitalisation of the branch lines is a phased step process. The initial step is to rehabilitate the rail lines to address the neglected deterioration of the infrastructure.

• Once the infrastructure is restored to an acceptable level, an on-going preventative maintenance programme will be implemented to maintain lines at an operational level.

• The third step is to implement an on-going maintenance programme for the equipment.

• The final step focuses on the railway support activities such as the operation of depots, distribution of goods, warehousing and cargo collection, etc.

Infrastructure Rehabilitation Opportunities

The branch line network has been neglected to such an extent that it can be best described as being poor and technically substandard. To attract and sustain an optimum amount of cargo on the branch lines, the lines have to be rehabilitated to an operable state where they can provide a safe and efficient service to customers.

This rehabilitation work can be outsourced to SMME’s and has been identified as follows:

• Repairs to tracks and track ballast;
• Clearing points and buried rails (mainly in unused sidings);
• Concreting crossings;
• Fencing where necessary; and
• Opening drains, culverts and bridges; and
• Repairs to buildings and structures.

Rail and Equipment Maintenance
Once the rehabilitation programme has been completed, an ongoing maintenance programme will be implemented. These activities can be contracted out to SMME's who have proven competence in this field, and can be listed as follows:

Rail
Fence repairs and maintenance; track weeding, herbicide spraying and clearing of verges; inspection and maintenance of drains, culverts, and bridges; etc.

Trains
Truck cleaning and body maintenance; routine painting of rolling stock; cleaning of passenger coaches; locomotive washing and cleaning; wheel inspections and lubrication; routine maintenance, and heavy overhauls

In terms of current legislation, Spoornet is the exclusive railway operator on most branch lines in the country. The KZN Transport Department and the National Department of Transport are engaging Spoornet on ways to unlock these activities as Micro and Small business opportunities.

These negotiations also extend to the operation of privately owned railways on these branch lines. Identified potential pilot project areas are the Nkwalini railway branch line, the Sisonke District railway network and the South Coast (Port Shepstone to Harding) railway lines.

Operational and Railway Support Activities
In addition to the potential for creation of work on the railway itself, once the railways are conveying a feasible amount of branch line traffic and offer competitive rates compared to road transport, there will be many opportunities for small businesses to provide services to the communities in rural areas served by branch lines. If rail service conditions were improved, some of the services which historically provided opportunities as peripheral services to the railways could well be viable again.

It is in this manner that the branch lines can act as significant economic generators for their respective rural areas.

B. Road Transportation - Small Transport Operators

Due to large companies dominating the freight transport industry and making it difficult for emerging operators to progress, the Freight Directorate of the KZN Department of Transport has instituted programmes for the training of small transport operators.

We have also been identifying working opportunities within the road freight industry for SMME operators. Our Regional Offices often procure supplies as part of their operational activities which require these goods to be delivered to depots or sites. This situation provides the opportunity for this transportation to be outsourced to small transport operators who are listed on the department's Small Transport Operator's database.

Truck Stops
There are currently initiatives that support the building of Truck Stops on certain routes in the province. The construction of these facilities will provide an opportunity to solicit the services of SMME's.

C. Maritime Industry

KwaZulu-Natal is naturally endowed with the two largest ports in South Africa, which are strategically positioned on major shipping routes, serving as major gateways to domestic and international trade. The import and export of cargo is a fairly complex industry involving many different activities. The Freight Directorate aims to establish relationships with the National Ports Authority and other industry leaders to identify opportunities for SMME development in the maritime sector.

In conclusion, the hosting of this Empowerment Summit and the showcasing of these opportunities demonstrates the commitment of the KZN Department of Transport to utilising all sectors of the transportation market, to maximise economic development and the creation of jobs for the people of KwaZulu-Natal.

I thank you.

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