President Cyril Ramaphosa’s office has warned that embattled state-owned entity Transnet’s continued underperformance is having devastating effects on the economy.
The Presidency made the statement in a week when Stats SA revealed that the official unemployment rate was 33.5% in the second quarter of 2024.
Rudi Dicks, the head of project management in the Presidency, asserted during a joint media briefing between government and business that Transnet was currently missing its performance and operational targets.
For Transnet to punch below its weight, he said, had negative consequences for the economy. Transnet has been failing to move a volume of 200-million tons of goods per annum.
Compounding its woes, according to financial services firm PSG, was that it has seen a decline in profits from R5-billion in 2019 to a net loss of R5.7-billion in 2023 and a staggering debt burden of R120-billion.
“We do sit with a significant challenge where we begin to see an impact on critical sectors that are dependent on both the [Transnet] ports and freight rail system, mining in particular, for example, commodities iron ore, manganese, chrome and more importantly coal [are affected],” said Dicks.
In a media statement this week, the Presidency and B4SA, an organisation comprising established business, explained business has provided significant technical support and resources to Transnet Freight Rail. These included procurement and operations expertise, and port maintenance support for Transnet port terminals.
“The Transnet board and management team are making progress in implementing the Transnet recovery plan. Despite the significant efforts by the partners, there is broad acknowledgment that Transnet requires substantial interventions to improve performance to meet the needs of its customers and the market demand necessary for sustainable economic growth,” read the statement, which was released following a meeting between Ramaphosa and business leaders.
“The meeting agreed that the rapid implementation of structural reforms and strict adherence to the Freight Logistics Roadmap deadlines are crucial to facilitate participation of, and investment by, the private sector to help address our national logistics challenges.
“This is crucial to ensure that our commodities and manufactured products can be competitively sold into the local market and exported to meet demand. Resolving these issues will promote job retention and job creation,” it said.
Transnet Group chief executive Michelle Phillips stated: “Transnet is very big. And … it is too big to fail. However, I am not sure about too big to manage…”
Phillips, who spoke during an interview on PSG’s Think Big series 2024, affirmed that the company’s board of directors, executive management and organised labour and its customers have been working in unison to ensure that Transnet does not fail.
“We’ve completed the first six months of that recovery plan and have seen the stabilisation and some turnaround in both our operations and financials.”
