South Africa is renowned for its transition from apartheid to democracy which was a difficult and bloody one. It is also known and respected for its formidable rugby team, excellent wine, and diverse cultural fusion. Yet, in the cutthroat world of business and finance, the country faced a major hurdle in producing sufficient electricity before Transnet overshadowed Eskom with a staggering show of ineptitude, adding fuel to the already raging fire of a nation grappling with perilous economic challenges.

By Themba Khumalo

Transnet, an entity responsible for managing and operating freight rail, ports, and fuel pipelines, is currently facing a rapidly escalating crisis that is causing substantial disruptions throughout South Africa. Amid the ongoing challenges arising from Eskom’s considerable underperformance and the energy crisis, it is imperative to address the critical condition and inefficacy of the railway and port infrastructure. This matter requires prompt attention, with an emphasis on implementing practical and viable solutions.

Lately, I must grudgingly admit, there has been a slight dip in load-shedding, but do not get too excited – it is not because Eskom suddenly got its act together. Nope, not at all. The improvement is actually due to a hasty patch-up job at a power station that still does not meet the government’s pollution rules. On top of that, businesses and affluent homeowners have been swift to tackle the crisis by embracing rooftop solar power, taking matters into their own hands in the face of the blackouts.

However, rail customers cannot just skirt around the issue of hauling massive amounts of iron ore, chrome, coal, and other hefty cargo. Tackling this issue calls for a real shake-up and a backbone of unwavering political will.

Transnet is currently up against a real uphill battle. The ports and railways are in a total state of decline due to long-term neglect, ineffective management, and pervasive issues of corruption, crime, and misconduct.

Furthermore, the situation has been worsened by the appointment of inexperienced executives by its sole shareholder, the Department of Public Enterprises.

Transnet presents a larger issue than previously understood, but it should also be more manageable to address than Eskom if the shareholder were to shift their approach and ensure that it is staffed with the appropriate expertise.

The incoming Group Chief Executive Officer of Transnet is required to have advanced expertise in effectively managing the intricate operations of ports and railways. They should demonstrate strategic thinking and a strong commitment to delivering exceptional customer service. Proficient leadership and personnel management, negotiation with labour unions, and the maintenance of strong trade performance are all essential aspects of the role.

A comprehensive understanding of Transnet’s processes and systems is crucial to ensure optimal company performance. Additionally, the ideal candidate should possess technical proficiency in port equipment, rail infrastructure, and rolling stock. A forward-looking mindset is essential for driving the company towards new opportunities in the African business environment, leading reform initiatives, and diversifying revenue streams. Given the current challenges facing Transnet, the organisation requires an experienced leader who is prepared to meet the demands of the position.

To instil confidence and certainty among the company’s stakeholders, the incoming Group Chief Executive Officer needs to demonstrate a track record of achievement in the rail and ports sector. With the current underperforming and unsatisfactory state of all operational divisions within Transnet, the individual assuming this role must possess the ability to effectively persuade investors to actively engage and invest in the company and the broader South African context.

It is very important to avoid appointing an inexperienced person who will clumsily bumble, incoherently mutter, and awkwardly trip their way through the situation, ultimately dragging the company down to the murky depths of the sewer it is already wading in. The danger of appointing an incompetent crony with political clout but zero expertise in rail or ports to head a sophisticated entity like Transnet will also sabotage the reform proposals laid out in the latest turnaround plan presented by the board.

Turnaround Plan

Transnet’s turnaround plan is based on a set of specific objectives aimed at improving and enhancing the operational performance of the freight rail division, with a particular focus on prioritizing the rail corridors that support vital sectors of the economy.

The board, under the chairmanship of Andile Sangqu , has acknowledged the need for transformation in the rail network to enhance Transnet’s performance. The rail network plays a vital role in the economy by facilitating the transportation of a significant portion of South Africa’s iron ore and coal to global markets.

There is no denying that it is crucial to revamp the rail network to enhance Transnet’s operational effectiveness. The difficulties faced by Transnet have a substantial impact on South African businesses and have a detrimental effect on the nation’s export activities.

A proposed plan for improvement has been presented to the ministers of public enterprises and finance, outlining specific objectives to be accomplished within the next six to eighteen months. The plan proposes the division of Transnet Freight Rail (TFR) into two separate entities: Transnet Freight Rail Operating Company and Transnet Rail Infrastructure Management. One division will concentrate on improving train operations by expanding capacity and enhancing network efficiency, while the other will be responsible for maintaining and safeguarding the infrastructure to reduce vandalism and cable theft.

The comprehensive strategy for turning things around, which calls for a top-notch CEO, is based on a set of core principles that include:

• The balancing of the financial stability and the operational performance of the business

• Improved utilisation and care for operational assets and infrastructure.

• Improved integration and operation execution across operating divisions.

• Improved employee engagement and visible management at operations

• The development of a deeper accountability framework

• Cost reduction measures, cash flow and working capital improvements

• Continuous engagement and collaboration with all relevant stakeholders, including organised labour, customers, funders, government and industry.