Despite its “pretty promises” of radical economic transformation, government has failed emerging entrepreneurs who have to compete against wellestablished global companies in the freight industry. That’s according to managing director of Khuluma Freight Services, Saul Maphanga, who told FTW that government needed sound policies, along with a definite timeline linked to those policies, to ensure transformation. This includes a need for policies around deferment of payment in terms of Customs and VAT as smaller companies are not in a position to lay out the big payments on bigger consignments upfront. “Furthermore, what is the department of transport doing to support emerging entrepreneurs and opening up doors?” queried Maphanga. He conceded that the procurement policies for state-owned entities (SOE) were a step in the right direction. “It shows that there is a conscious effort by government that radical economic transformation needs to be regulated. It also shows that change is coming, but it is not coming as quickly as it should,” Maphanga said. He suggested, however, that policies should focus on getting major private sector players to also play a role in transformation. “They have knowledge, skills and experience to share and they should be set targets to encourage supplier development in the freight industry,” Maphanga said. There should be consequences for those private sector companies that did not comply – such as losing their lucrative government contracts, he added. Khuluma Freight Services’ own growth is partly credited to an SOE (Eskom) that gave the 100% black-owned company – with a 60% black female ownership – a chance when it was “fighting for survival among the big multinational sharks”. Bobby Griffies, operations manager for Khuluma Freight Services, pointed out that the company had started in 2000 using two utility vehicles (bakkies) and two drivers to deliver small express parcels in Johannesburg. “Around that time Eskom – along with its working partners like Alstom, Siemens, Toshiba and G Electric – adapted its procurement policies to aggressively target small, emerging companies and we successfully bid for a contract for their courier services parcels business,” he explained. Maphanga said that Eskom was also conservative with its contracts for emerging freight businesses, starting with small deals that were expanded once the emerging businesses proved themselves. “These contracts gave us the opportunity to expand our offering to airfreight, seafreight and road transport – including cross-border – but that meant we needed access to more financing and needed to team up with international and regional partners. These are two major obstacles when you are an unknown entity,” said Griffies. Maphanga agreed, noting that financial institutions saw freight businesses as high-risk, especially in light of the high capital expenditure needed to provide transport services. Furthermore, he added, for international freight forwarding, one needed strong global partners. “But we found several doors simply shut in our faces by the multinationals who controlled 90% of global freight forwarding in South Africa at the time.” He said he and his team had learnt the hard way how to play the game. “We’d sacrifice here to gain there and we continued to fight despite the challenges – finding small independent companies just like ourselves to partner with internationally, said Maphanga. As government tightened up on its black economic empowerment (BEE) policies, Khuluma attracted a lot of lucrative government contracts and suddenly, he said, those same global companies who had firmly shut the door to a deal with Khuluma were now wooing the company directors. “Now we find ourselves on a very nice growth path, with plans to open offices in Durban, Cape Town and near the port of Ngqura in the Eastern Cape. We are also looking to pursue more corporate business and wean ourselves a little from being too dependent on government contracts,” said Maphanga.
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With the new BEE regulations, global companies who firmly shut the door to a deal with Khuluma are now wooing the company directors. – Saul Maphanga
