Increasing transparency and improving project management: South Africa’s National Roads Agency (SANRAL)

Princeton University This analysis is based in part on research conducted by Richard Bennet and first published in July 2011 by Innovations for Successful Societies. The scoring assigned and the text below represents the Centre’s own work, however, and do not reflect the views of the case study authors, Innovations for Successful Societies, or Princeton University. Quotes included in the text come from interviews carried out in South Africa in July 2011.

At the time of the post-apartheid elections of 1994, South African transport infrastructure could not support the radical social and economic changes that were about to take place. The means of achieving these improvements fell to SANRAL, the new roads agency, which was created in 1998 and based on the PPP model of Transit New Zealand. Such an initiative required determined and energetic management.

The challenge

After the first post-apartheid elections in April 1994, the new ANC government under Nelson Mandela faced numerous problems in developing South Africa’s transport infrastructure so that it could support the transition to a new social and economic order.

Under the apartheid system, housing policies had located the black townships far from economic centres, and public transport was limited. It was difficult for the people from the townships to work, or to seek employment, in the major cities. The road network was similarly restricted and in need of transformation.

The minister of transport, Mac Maharaj, believed that transport was a fundamental pillar of development, essential to ensuring that whole population of the country was to participate in South Africa’s economic growth.

The initiative

This need for change led to a series of green and white papers about the future of transport in the country. The legislative outcome was the formation of The South African National Roads Agency Ltd ( SANRAL), which was created under The South African National Roads Agency Limited and National Roads Act, 1998.

SANRAL was created to separate the policymaking functions of the ministry of transport from transport implementation. It aimed to promote independence and transparency and improve project management – on previous projects construction firms had used bribes to win tenders and bypass regulations.

Maharaj set up a working group “to develop an overarching framework for national transport policy”. [1] There were six subsidiary groups “to analyse issues within specific transport sectors”. There was then a plenary session in July 1995 in which “more than 300 people from across the entire spectrum of transport” took part. As part of the review, a group from the Roads Department visited other countries to learn from others’ experiences.

Of particular interest was New Zealand’s model for transport development, Transit New Zealand, which “sought to introduce the logic of private sector management into public sector operations”. This was chosen as a suitable model for South Africa and SANRAL was defined to operate along similar lines.

The public impact

An important component of SANRAL’s overarching framework was to develop fast roads between the main commercial centres. The Gauteng Freeway Improvement Project (GFIP), scheduled to support the traffic needs of the 2010 World Cup, provides a useful example SANRAL’s policy in action.

Construction was begun on GFIP in 2008 and it was eventually opened to the public in 2011. Even though it had failed to meet its World Cup deadline, had a very positive impact and public response, according to the management team. It cut travel times between Johannesburg and Pretoria dramatically – the project manager, Alex Van Niekerk, said that “‘people were raving on the radio about how many hours they were saving’.” [2] The project created 20,000 jobs during construction and an additional 900 permanent jobs related to maintenance and managing the collection of tolls.

What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Stakeholder Engagement Strong

The internal stakeholders involved in the creation of SANRAL were the South African government, Mac Maharaj, the minister of transport, Nazir Alli (SANRAL’s chief executive) and Ketso Gordhan (the director-general of transport). Maharaj commissioned a review study of country's transport system. Alli and Gordhan went to New Zealand to study their transport model, which was later used as the prototype for SANRAL. The South African Parliament passed the 1998 Act to form the agency and give it statutory backing and force.

The external stakeholders involved at the time of planning were the representatives from workers’ unions, taxi associations, universities and consulting firms who all took part in the review of the transport system commissioned by Maharaj. It demonstrates that all the stakeholders were aligned towards the common objective.

Political Commitment Strong

The creation of SANRAL had strong political backing, particularly from the minister of transport. Following the review process that he initiated and commissioned, Maharaj lobbied Parliament to pass the legislation that would formalise the changes to his department’s role by establishing SANRAL as a public corporation.

Policy

Clear Objectives Good

The objective of creating SANRAL was clearly stated and it has remained the same throughout. The tendering process was revisited and made more competitive and in line with the objectives, so that the procurement process for road projects was made more transparent. The objectives were focused on the need to revitalise the South African road network and leverage it for economic growth.

Evidence Good

SANRAL was modelled on Transit New Zealand, which introduced private sector management into public sector operations through outsourcing and PPPs. It was based upon a reliable, existing model. Gordhan noted that “we copied New Zealand, with one major difference. In New Zealand there were no toll roads. They were not mobilising private capital for public infrastructure. Theirs was about an efficient allocation system. Ours was about an efficient allocation system and raising capital.” [3] Based on industry consultations and what they had learned from New Zealand’s model, Gordhan and Alli proposed that taxpayers should not directly fund the construction and maintenance of roads.

Feasibility Strong

There was a valuable continuity of personnel between the former system, centred on the ministry’s Roads Department, and the newly-formed agency. There was also the evidence of the feasibility and success of Transit New Zealand as SANRAL’s model.

When SANRAL was launched, one out of the eight board seats was reserved for a representative of the Ministry of Finance to minimise conflict when it came to funding transport projects. According to Alli, “‘I think one of the smartest things we did was we reserved one seat for … somebody from the national treasury. … There is always conflict between the different departments and national treasury in terms of what your allocation should be. Because we had somebody from [the Ministry of Finance] sitting on our board, there was a better understanding of what our business was all about without us having to keep on justifying over and over again to people who didn’t have intimate knowledge of the agency. That was the big advantage.’” [4]

Action

Management Strong

Alli was praised for his leadership skills and strategic thinking, as in the example above. He made anti-corruption rules a major part of SANRAL's corporate culture from the beginning, setting up an internal whistleblowing hotline. The organisational structure was clearly defined and, to increase efficiency, the structure was non-hierarchical and decentralised: clusters of employees with expertise or experience in particular fields were assembled in a flat management structure.

SANRAL also used data collected over a period to come to their decisions, for example using data from its toll collection system to float the toll rates. This highlights the pragmatic and data-driven decision-making and management.

Measurement Strong

Measurements such as the number of contracts, the amount of money invested,  kilometres road repaired or built could be used to assess the output of SANRAL and are detailed in their annual report. [5] Furthermore, changes in journey times for travellers provides a direct measurement of the outcome and impact on citizens.

The CEO of SANRAL, Nazir Alli, wrote in the 2014 annual report that: “we cannot predict the future but can analyse the trends and guide the outcome as we go forward” suggesting that SANRAL actively reviews measurements to guide policy making.

Alignment Fair

When SANRAL was created in 1998, the main stakeholders within the government well well aligned, for example it required cooperation between the Ministry of Transport and the Ministry of Finance.

However, this alignment is not always carried down to specific initiatives. For example, regarding the GFIP, politicians whose constituencies were to be affected gave their support and the project was approved. However, when SANRAL imposed tolls on the Gauteng Freeway, the then transport minister, Sbu Ndbele, was forced to suspend it because of the public outcry, demonstrating a lack of alignment between SANRAL and the local provincial government, the constituency members of parliament and the road users.