The government is playing Russian roulette with Transnet. The organisation is facing challenges with declining performance in its ports and railways. The key issue now is whether the right people will be appointed to lead the organisation or if we will see a repeat of the disastrous appointments made in 2020. It is crucial that Transnet makes the right decisions to improve its operations and arrest the decline for the benefit of the country’s economy.

By Themba Khumalo

South Africa has earned good marks with a successful rugby team, diverse cultural landscape, Grammy Award-winning musicians and the Big Five. While these are significant features, the country’s biggest problem causing strife in the economy is the failure to generate and supply sufficient electricity.

However, a more urgent and complex problem facing South Africa that has gone unnoticed for some time is the crumbling state of its freight and logistics network entity – Transnet.

The deteriorating state of Transnet poses an even bigger threat to South Africa than the ongoing energy crisis triggered by Eskom’s collapse. While the blackouts have been disruptive and damaging, the inefficiencies at Transnet could have far-reaching consequences for the economy and trade. Prioritising the repair and improvement of railways and ports must be a top priority to prevent further economic decline in the long run.

Transnet becoming the next Eskom is a concern even Finance Minister Enoch Godongwana has voiced. According to him, the nation’s protracted electrical crisis continues to be an obstacle to economic growth, and he is worried that issues bedevilling the freight and logistics sector may impede growth even more.

“One of the things we should not do in dealing with the Transnet issue is not repeat the Eskom template. It’s a bad template. We put money into Eskom right through, hoping that by fixing Eskom, we are fixing the electricity problem,” Godongwana told economists in Cape Town on Thursday.

The state of Transnet is abysmal, with declining performance in its ports and railways. This decline is a result of long-standing underinvestment, inept and poor management, and pervasive corruption, criminal activities, and racketeering, to boot. The situation was made even worse by the appointment of inexperienced leadership, including top executives, by the Department of Public Enterprises in 2020.

If the machinations surrounding the appointment of new executives are any indication, things appear to be heading for further catastrophe. By the end of the month, Transnet is expected to announce the appointment of a new group CEO; however, the process is beset with controversy.

According to reports, the board of directors submitted three names—including Michelle Phillips, the action Group CEO—due to political manoeuvring after feeling pressured to reject the experienced and highly qualified candidates Ravi Nair and Mlamuli Buthelezi.

Some industry players have pointed out that Phillips does not fit the mould because she has legal qualifications. They argue that she does not meet the requirements for the position—she lacks the engineering or finance degrees—as stated in the advertisement. The job description specified that applicants must have at least 20 years of experience working for large commercial companies and a postgraduate degree in engineering, logistics, economics, finance, or a related field of study.

Bring In Experience With The Right Skills

Last September, Patrice Motsepe, the chairman of African Rainbow Minerals, speaking during the presentation of the company’s annual results, emphasised the critical importance of recruiting top talent by stating that the best individuals are indispensable. Motsepe underscored the urgency of addressing issues within Transnet, stressing the need for swift and decisive action rather than engaging in frivolous activities. This statement followed a notable decline in African Rainbow Minerals’ annual profit, partly attributed to logistics challenges.

Motsepe emphasised the importance of having strong and experienced leadership in critical institutions like Transnet. He stressed that in times of crisis, it is crucial to have individuals who can effectively manage the situation than experimenting with leadership could further exacerbate the current logistics crisis, leading to even bigger economic losses.

“The principle of employing the best skills and expertise, the best person for the job, is non-negotiable. Absolutely non-negotiable.

“We can’t be experimenting. There is no time for playing around and fidgeting by saying you are such a smart, bright, young person but your experience is in question. And you put that person in a position of leadership that requires five, ten, 15 years of experience of practical experience.”

Motsepe provided candid feedback in response to a journalist’s questions regarding Pravin Gordhan’s proposal for a potential restructuring of Transnet’s senior leadership. Motsepe stressed the importance of executives possessing relevant experience, suggesting that while they may excel as CEOs, they should not be tasked with managing areas where they lack expertise, such as the railway industry.

“Let me make a bad example… I’m an excellent CEO, but I don’t have experience in the mining industry. 

“The best people in any industry are the ones who have grown up in the industry and understand it.”

Meanwhile, Transnet’s chairperson, Andile Sangqu, has announced that the entity was expected to finalise the appointment of a new permanent CEO and someone to head its largest division, Transnet Freight Rail, by the end of the month.

“I think the end of the month is a realistic expectation all things being equal,” said Sangqu via email to miningmx.com.