South Africa’s owner-driver model is failing: How can it be fixed?

South Africa’s Owner-Driver empowerment model seem to be coming to a dead end after a number of high profile schemes were visited by major abusive scandals, some of which have landed in court. There was a time when the Owner-Driver model was seen as a path promising a ground up, grassroots of you like, method of empowerment. This is the time when major South African corporations with logistics heavy businesses like, South African Breweries (SAB), PPC, Lafarge, Cargo Carriers, AfriSam, Barloworld, ABI/Coca-Cola, UTI, Famous Brands etc boasted about their empowerment programme. All those boasts have dissipated if our, survey of the market is anything to go by. As part of an on-going survey of the Owner-Driver space, we put some questions to a well experience logistics and transport operator Vernon Naicker from Antanma Transport. 

From your point of view, what is the state of Owner-Driver activity in South Africa?

In my considered view, South Africa’s Owner-Driver schemes have largely failed to live up to their billing of being an effective transformation driver. And I think this is because key stakeholders are holding the wrong end of the stick.

To rectify the situation we must ask the difficult question. We must address the elephant in the room. The key question to ask is: Does a good driver make a good entrepreneur?

My survey of Owner-Driver activity, based on my experience of 20 years as an operator and some academic activity, suggest that it’s a mistake to blindly categorise owner-drivers as potential entrepreneurs. Key drivers of these schemes, mainly major corporations, know this but it suits their interests to ignore it.

And so; you end up with a situation whereby South Africa’s Owner-Driver schemes benefit many other people but the designated beneficiaries. The Owner-Driver is down in the pecking order of the supposedly symbiotic relationships of the schemes.

 What role does/should Owner-Driver activity play?

The scheme is far cry from an empowerment mechanism. It’s really a modern day slave system devised to serve only one thing: to manufacture BBBEE points for distribution intensive companies.

They gain the benefit of creating overnight small and medium enterprises (SME’s) that are said to be 100% black owned which gives them an opportunity to claim points on their scorecard. They retain control of their distribution network on the premise of a process of skills transfer to the drivers. Sadly this skills transfer can never be fully realised because of the limitations of the drivers.

Companies mitigate risk of strikes as business owners cannot strike. Vehicle abuse, diesel consumptions and maintenance costs become a direct responsibility of the ‘new business owner’. The companies now have an “employee” with almost zero risk to themselves.

In my view the South African Owner-Driver model needs a complete overhaul. The schemes can be best utilised as empowerment vehicles in legacy programmes or alternatively creating incubation programmes for young undergraduates who struggle to get employment and have inherent entrepreneurial traits. The unmitigated pick and choose of Owner-Drivers is too cumbersome.

What are the major gaps that face the Owner-Driver community?

Most Owner-Drivers are limited by their own capacity to be fully integrated within all spheres of business activity.

Entrepreneurs by their very nature are drivers of their vision and goals. Drivers in the current schemes are heavily reliant on third parties to manage and make key decisions around the running of their businesses. Critical areas of the business; like scheduling routes, capacity management and deciding on which suppliers to use; are in many Owner-Driver schemes determined by principal partners that awarded drivers their contracts.

The only activity that drivers are in control of is the driving of his truck. In many cases they fail to transition their behaviour from employee to business owner.

Education, the lack of it that is, amongst owner-drivers is “the” major factor that allows for abuse of this sector by unscrupulous operators.

The majority of drivers are from previously disadvantaged communities who under the apartheid system were subjected to the inferior “Bantu Education” model. Many come to the business with almost non-existent mathematical and accounting skills and many are completely illiterate.

There are some schemes where Owner-Driver schemes come with advanced training modules in key aspects of the business. But in most cases Owner-Drivers fail this training for obvious reasons. If a driver lacks basic literacy skills, how can he be expected to grasp advanced business principles, for example the reading of a balance sheet.

Understanding of complexity contract laws can be a major challenge to the best of entrepreneurs and yet drivers are ushered into contracts with the verbal promise of untold riches that await them.

How can these gaps be addressed?

The selection criteria of candidates needs to be reviewed in the sense of the earlier question: Do good drivers make good business owners?

We have to admit that if we look to qualifying criteria being more stringent to entrepreneurial skills, it may disqualify a large portion of current drivers from participating in the scheme.

A more practical approach in training and development will have to adopt life skills; basic literacy like reading and writing. These are building blocks that can be done in phase 1 of the learning and development programme.

Drivers must have more autonomy in order to improve the success rate in these schemes.

What are the common mistakes committed by owner-drivers?

Living within our means is a challenge for the best of us. The driver as a new business owner has a world of credit which is available to them and the lure of credit can be too attractive to pass by. Before long, apart from the challenges of business cycles, he has a mountain of personal debt to service and defaults is inevitable.

The business bank account is under the drivers control and before long legislative payments like VAT are foregone to supplement their lifestyles. This is a big part of the problem which is why I think life skills training can make a huge difference.

Any other thoughts?

The current Owner-Driver scheme is in need of a makeover. These schemes may work well in first world countries but not in South Africa.

The model can only succeed in South Africa if it is adjusted to local realities.

Owner Driver schemes are not entirely new concept. The concept is popular in Europe, particular in the United Kingdom (UK) and in the United States of America (USA) where it is called the Owner-Operator Scheme.

The difference between the South African version in comparison to the overseas models, is that the South African Owner Driver Scheme is guaranteed fixed period, thereby ensuring continuity of work. The overseas Owner Drivers operate largely as independent sub-contractors, looking for freelance work, having to find work opportunities themselves wherever opportunities arise in the transport market. These independent operators travel throughout Europe, picking up return loads, thus ensuring that the return journey is not ‘wasted’.

In South African context, the schemes operate independently and the owner driver is contractual bound to carry out work for a specific contract period. The contract in this instance is primarily between owner driver and business for which the sole distribution is required. This arrangement is not always sustainable as the vehicles run back empty to the depot to be loaded again.

Owners driver in South Africa enter the scheme with the perception that they will increase their income. This is not always case. Depending on the type of business, sales, weather, cyclical or seasonal factors are external influences, which the owner driver has no control over and these factors directly impact business turnover.

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