The recent resignation of three executives from Transnet has brought attention to the deteriorating state of South Africa’s state-owned enterprises (SOEs). In light of this development, critics are urging Public Enterprise Minister Pravin Gordhan to consider resigning from his position.

By Tshawe lama Tshawe

The recent resignations of three high-ranking executives at Transnet have prompted experts to raise concerns regarding the level of political intervention within State-Owned Enterprises  These experts are advocating for the resignation of Public Enterprises Minister Pravin Gordhan.

Transnet’s operational division, Transnet Freight Rail (TFR), will be experiencing a change in leadership as its CEO, Siza Mzimela, has tendered her resignation. Having joined the company in 2020, Mzimela will be concluding her tenure by the end of October.

Mzimela’s departure comes in the wake of the recent resignations of Transnet CEO Portia Derby and CFO Nonkululeko Dlamini.

In light of increasing concerns from the business community and investors regarding the instability within the country’s embattled state-owned enterprises (SOEs), particularly Transnet and Eskom, which currently have no permanent chief executives, experts are calling for Gordhan to step down.

Critics have highlighted his involvement in strategic decision-making, which has had adverse effects on the fiduciary duties of board members.

Gordhan has faced allegations of interference, even at Eskom. It is claimed that he rejected a board-recommended candidate for the CEO position, stating that they should consider at least three candidates for the shortlist.

Derby’s decision to resign comes at a time when Transnet, which has been facing ongoing challenges, has been under pressure from mining and industry stakeholders. These stakeholders have pointed out the inefficiencies within the state-owned enterprise, such as the controversial choice to rehire experienced staff members who were initially offered voluntary severance packages.

According to insiders, it is believed that Gordhan was aware of the severance packages. However, advocate Melanchton Makobe, the head of legal at the Department of Public Enterprises (DPE), has denied these allegations, stating that they are “untrue”.

During an interview on the Clement Manyathela Show on 702, Makobe said Gordhan was “not aware” of the move by Derby to offer packages to employees.

According to Jannie Rossouw, an economics professor at Wits University, the Department of Public Enterprises has “no reason to exist, because neither the minister nor the department add any value”.

“It also seems that the minister is only involved in SOEs when it suits him and not involved when it does not.

“The minister’s role in interacting with SOEs is not well-defined.

“The only solution is to close the department and get rid of the ministry – also getting rid of other struggling SOEs, because these enterprises are not well-run, wasting billions in taxpayers’ money,” said Rossouw. 

SA Federation of Trade Unions spokesperson Trevor Shaku said Gordhan’s interference in the running of SOEs would “only become a problem if it stifles crucial efforts by the executive management to turn around the SOE”. 

“When it comes to Transnet, we must recognise that the woes of the company were not engineered by Portia Derby or Siza Mzimela.

“They have been there for some time and have two main sources: the widespread looting of Transnet and other SOEs by the aspirant bourgeois that is using the state as a site of accumulation and the engineering of crises in SOEs – setting them up for failure to justify their privatisation.

“These executives should not be used as scapegoats for the larger issues of corruption and privatisation.

“Ministers should be called to resign when they are incompetent, corrupt and are anchoring wasteful expenditures.

“Minister Gordhan should resign for selling the SOEs to the private sector, such as the selling of SA Airways to Takatso – not because he is enforcing SOE’s memorandum of incorporation.

“Besides, the main culprit in privatisation is the ruling party, not the individual ministers.

“Privatisation is the main policy of the ANC.

“The lasting solution to the SOEs is not to sell them to the private sector, but for the government to re-invest in these state companies,” maintained Shaku. 

University of Johannesburg political economist, Professor Patrick Bond said: “Minister Gordhan has been lauded for fighting corruption when he was Finance Minister, but when his party did a dirty deal with Hitachi at Medupi, gaps became obvious.” 

Professor Raymond Parsons of the North West University’s School of Business and Governance said the regular message from the investor community was that “the economy urgently needs stability in the management of SOEs, to provide certainty in their strategies and policies”. 

“Every effort must be made to reassure the business sector that – not only will the best candidates be appointed to the top positions – but that vacancies at CEO level will be filled as soon as possible.

“The DPE needs to make confidence-building decisions on the future management of both Eskom and Transnet at the earliest opportunity,” added Parsons.

Mzimela’s departing message to staff best sums up the state of SOEs in South Africa and the frustration of those tasked with turning them around and making them profitable. 

She wrote: “Despite the seemingly endless litany of legacy challenges, which include lack of tools for peak performance, lack of locomotives, crippling theft and vandalism, as well as the ‘potholes’ in the infrastructure system that force slower movement of trains due to our company’s safety-first ethos, you, the people of TFR continued to push forward.”