Transport to empowerment

Africa’s Best 350 (PTY) Ltd (AB350) is one of the biggest 100% black-owned bus companies in the country providing safe, reliable, affordable public transport to rural communities. The company operates a fleet of 185 65-seater buses from eight depots in the Eastern Cape and employs 500 permanent personnel.

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Simlindile Hintsa, the Executive Chairman, grew up in Holy Cross, Flagstaff and attended Aliso High School. Thereafter, he joined the Transkei Defence Force in 1985, which he remained with for 12 years before joining the province’s bus industry in 1997.

Mr Hintsa spearheaded the consolidation of small bus operators (“SBOs”) into a single legal entity, achieving bulk purchasing power, centralised administration and management.

The company has become a leader in providing excellent customer service, value for money and uplifting rural communities by providing scheduled daily bus commuter services, particularly for the elderly, casual workers, job seekers and rural community members.

It is the only wholly black-owned company of its kind that has completely changed the lives of the SBOs in the Eastern Cape. It is the company’s hope to expand the business model into other provinces and, similarly, to empower other provinces SBOs.

In the beginning

From 1999, the Eastern Cape Department of Transport (EC DoT) entered into a Negotiated Contract with individual small bus operators. In 2001, Mr Hintsa, the Eastern Cape Transport Network (ECTN) Secretary, participated in an initiative to form a single legal entity for SBOs. Various initiatives to consolidate the SBOs were attempted without success. Mr Simlindile Hintsa was elected as the new Chairman.

The EC DoT proposed and encouraged the individual bus operators to form a single legal entity across the province. Simultaneously, the National Department of Transport invited all SBOs across the country to brief them about the new Transport Legislative Framework (DTI Document). Mr Hintsa was elected to represent the Eastern Cape Bus operators in the National Transport Forum.

The participation of the members in the National Transport Forum resulted in changing the name from ECTN to Eastern Cape Peri-Urban Bus Operator’s Association (ECPUBOA), which was led by Mr Hintsa as a Chairman. Bus operators resolved to form associations according to local and district municipal boundaries in the Eastern Cape. The district municipalities served as regional associations. An interim working committee was elected to facilitate the transformation process of the Eastern Cape Bus Operators. The EC DoT advised the bus industry to discuss the formation of a single legal entity of their choice. The bus operators agreed to form a single legal entity across the province encompassing all bus operators. The EC DoT supported ECPUBOA by conducting the Route Viability Study to 166 Routes that were previously contracted by the department to the individual bus operators.

The province has six district municipalities and has local chairpersons for each, who were appointed Board Members of the company in order to maintain district representation and stability.

Taking the initiative

On approval of the funding by The Financing Consortium (IDC, DBSA, NEF, ECDC and Scania Finance) the shareholders of AB350 paid R2 500 Share Capital and the route rental holders paid a further shareholder loan.

AB350 is contracted by the Department of Transport to commute 6-million commuters per annum from the rural villages to towns, thereby contributing to robust economic activity.

“The elderly over the age of 70 board our busses free of charge. The company offers affordable transport due to the subsidised bus fare enjoyed fully by the passenger,” Hintsa explains.

AB350 has eight depots across the Eastern Cape. The construction and refurbishment of these eight depots resulted in 55 indirect jobs This was from grant funding provided by the Eastern Cape Department of Transport.

AB350 is in the final stages of building a bus and truck repair workshop, which has received funding from NEF and Old Mutual. This truck and bus repair workshop will create 38 permanent jobs, and 50 indirect jobs were created during the construction phase. AB350 is partnering with the Old Mutual Foundation by providing CSI grant funds for the upliftment of the surrounding communities. The first initiative is the provision of water to the local community from the borehole, water pump and reservoir for the AB350 Bus Repair Centre. It is strategically located on the N2 just outside Mthatha. It is ideal to service all commercial vehicles between East London to Durban.

AB350 entered into a partnership with King Sabata Dalindyebo TVET for skills training and on-the-job training for the students. The company donated a bus chassis and drive-train to the college, conducted refurbishment of the mechanical engineering workshop and provided machinery and equipment. The first intake for an internship to AB350 from KSD TVET will complete their training in February 2019. Furthermore, TetaSETA has in-principle approved 20 students for three-year Mechanical Engineering Artisan Development Training.

Additionally, AB350 was awarded the Bronze Award in the Van Rijn BBQ Awards– Best Established Black Business in 2012.

Facing the challenges
Age of the bus fleet

There is a huge concern among bus operators with regard to the current policy regulation where a bus has to be retired after 15 years of operation. It is detrimental to the small black bus operators, and its implementation effectively excludes many of them from business opportunities with the government.

Determination of licence fees for commercial vehicles

Licensing fees and the prices of permits are not standardised. Bus operators in different provinces pay different fees for licences and permits. The fees are also excessive. This negatively affects their ability to run their operations.

The administration of fines and penalties, such as the confiscation of a bus licence disk by the local traffic departments is inconsistent and leads to the loss of revenue.

Road infrastructure

The state of roads in rural areas is extremely dangerous, not only to operators, in terms of maintenance costs, but also in terms of accidents and the unnecessary loss of lives. They note, however, the progress in some areas where rural roads are being upgraded. However, the pace of maintenance and upgrades is generally slow.

In partnership with the Department of Transport, ECSBOC is hosting a Bus Summit early in 2018 in order to review, engage and challenge the industry issues facing SBOs. The Eastern Cape Small Bus Operators Council (ECSBOC) is comprised of SBOs who are AB350 shareholders and is the provincial structure of the South Africa National Small Bus Operator Council (SANSBOC).

Future growth and expansion

AB350 currently operates in the Eastern Cape but in terms of strategic growth, the company has ambitions to expand their services to other regions.

The Passenger Commuter Transport market is dominated by a few major players. Emerging SBOs have to participate and share a more defined slice of the Passenger Commuter Transport market.

AB350 proposes to replicate the working operational model of provincial SBOs who form a single legal entity, secure a negotiated subsidy contract and continue with a sustainable empowerment of the historically disadvantaged.

‘My extensive engagement and active participation in AB350, ECSBOC as a Provincial President, SANSBOC as a National President and the Transport BBEE Charter Council as a Board Member, is to ensure the SBOs realise their dream of a meaningful ownership, value and sustained involvement in the provincial and national public passenger transport industry,” says Hintsa.

Financial institutions are keen to assist in ensuring that these types of operations are replicated in other provinces, however, the consultative process is ongoing.

Leading with passion

The role of the Executive Chairman is to provide strategic vision and leadership towards maintaining sustainable growth of the company.

“I have to ensure that the affairs are properly managed between the company and the relevant stakeholders. I also have to ensure that the shareholders of the company themselves are being properly managed and that they understand what’s going on—this requires a moderate, calm temperament in order to ensure that one is able to engage effectively,” he says, adding that, at times, he plays a mediation role.

In terms of what motivates him after being in the industry for so many years, Hintsa explains that seeing opportunities, which others may have overlooked is a huge factor.

“One of the reasons why I’m so motivated around this is because I had quite a number of challenges in the beginning,” he says, explaining that it wasn’t an easy feat to persuade the government, who doubted the sustainability of the proposed venture and, secondly, the shareholders weren’t initially too keen on the idea.

“One had to persuade them and ensure that we’d stick to transparency in each and everything we did because what you have said today, you must say tomorrow and what you have said tomorrow, you must say it all round,” he adds.

I said to myself, ‘I must persevere to an extent that people will see it working’, and as a result, it’s still working now, and that keeps me motivated and enables me to come up with ideas to ensure the company grows from strength to strength”.

As a leader, Hintsa says, “You cannot judge yourself, it’s only the people who can judge you.”

He believes it is crucial to remain honest with yourself, to always know what you are talking about and to remain focused, show direction and be uncompromising with regard to corporate governance.

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