The adverse consequences of Transnet’s inefficiency issues are of great significance, as they have resulted in substantial disruptions and disturbances across multiple sectors. A major issue afflicting Transnet is the pervasive corruption that has infiltrated its operations and the presence of executives who lack the necessary expertise. These issues not only impede the effective functioning of Transnet but also have far-reaching implications for the broader economic environment.

By Themba Khumalo

Transnet, a formerly thriving state-owned rail and ports company, has experienced a significant decline in its operations and overall vitality.

It currently finds itself on the verge of existence, with no signs of positive developments permeating its weary corridors. Much like a patient relying on life support, Transnet’s future remains uncertain and in desperate need of rejuvenation.

Transnet has become as costly as a diamond necklace to its customers, as burdensome as a heavy tax to the fiscus, as draining as a leaky tap to the economy and as weighty as a mountain on the shoulders of South Africans in general.

Unless there is an intervention as swift as a cheetah chasing its prey, Transnet is poised to send shockwaves through the economy like a thunderous crash, shaking it to its core like an earthquake.

In a tragic twist of fate, the once thriving Transnet has succumbed to a series of calamities. Non-delivery, infrastructure crumbling under the weight of neglect, and the annihilation of value have become the haunting melodies of this unfortunate tale.

The absence of proper maintenance, coupled with a distressing blend of incompetence, corruption, and vandalism, has mercilessly brought Transnet to its knees. As a result, the backbone of South Africa’s export sectors – mining, agriculture, and manufacturing – now find themselves teetering on the precipice of crisis. The repercussions are dire, with revenue dwindling and job losses multiplying like a relentless plague.

In a devastating blow to the mining industry, the year 2022 witnessed a colossal financial setback of a whopping R50 billion. This staggering loss can be attributed to the woeful decline in the operational prowess of Transnet’s rail and port facilities.

The Minerals Council South Africa, in their astute estimation, revealed that the logistical chaos let loose by Transnet’s inefficiencies has unleashed a merciless onslaught on the sector, potentially obliterating a staggering 50,000 new job prospects and leaving the country reeling from a tax revenue shortfall of R27 billion.

Transnet’s financial journey took a wild turn, going from a triumphant profit of R5 billion to a staggering loss of R5.7 billion for the year concluding in March 2023. While the spotlight has been fixated on Eskom’s daunting debt predicament, Transnet has been grappling with its own financial woes. The company finds itself entangled in a web of debt, with a colossal sum of R130.1 billion weighing it down. As a consequence, Transnet is now burdened with the hefty responsibility of shelling out a mind-boggling R1 billion in interest payments each month.

But wait, there’s more to Transnet’s troubles than just their financial woes. A governance crisis of epic proportions is unfolding within the company, and it has caught the attention of none other than the Auditor-General. This guardian of financial integrity, bound by law to scrutinize Transnet’s financial results, has unearthed a crisis of mammoth proportions.

The Auditor-General’s scathing assessment, nestled within Transnet’s latest financial statements, leaves no room for doubt. Transnet’s adherence to auditing and financial reporting standards is feeble at best, especially when it comes to their dubious and extravagant spending. We’re talking about expenses that flout the laws and policies that govern them, whether by design or sheer negligence and could have been easily avoided had a modicum of care been exercised.

“There was inadequate oversight responsibility regarding financial reporting, compliance and related internal controls to ensure that compliance requirements are met to prevent irregular, fruitless and wasteful expenditure … The action plan developed by the leadership to address actual root causes for material findings was not effective, as repeat findings were raised during the audit process,” the Auditor-General stated.

When Portia Derby took the reins as Group CEO, she had a noble mission in mind: to cleanse Transnet of those who had been entangled in its capture. However, her approach was a misstep of epic proportions. She dangled enticing voluntary severance packages before the eyes of the highly skilled and experienced employees, luring them away from the company’s grasp. On the list were rail engineers, mechanics, train drivers, and management experts, all of whom possessed invaluable expertise.

In the blink of an eye, Transnet found itself stripped of these vital skills, plunging the entity into a state of utter chaos. This dysfunction has had a devastating ripple effect on critical industries such as mining, agriculture, and the automotive sector. These sectors rely heavily on the smooth functioning of railways and ports to transport their lifeblood – commodities and bulk goods.

Alas, Transnet’s failure to retain its talented workforce has left these industries gasping for breath, desperately seeking alternative means of transportation.

To steer Transnet back on course, we must urgently rally the troops of skilled employees, enlist capable contractors, and adopt policies rooted in solid evidence, not the whimsical fantasies of clueless executives. Let experience and merit be the guiding stars in all appointments. Now is not the time to bring aboard individuals who wish to conduct risky experiments on how to salvage Transnet’s sinking ship.

And while we’re at it, why are the voices of those who possess a firm grasp on running this entity so eerily silent? Where are the likes of the former group chief operating officer, Mlamuli Buthelezi…why are they silent?

I am inclined to hold the belief that individuals such as him when provided with equitable opportunities, possess the capacity to exert a substantial influence in effecting a positive transformation within the entity. Given their extensive expertise, it is highly probable that they possess the elusive recipe for revitalising Transnet. We must not underestimate the immeasurable value of their perspectives and their potential to enact a profound change within this moribund organisation.

Unless there’s a radical shake-up, led by visionary and battle-hardened leaders to resuscitate Transnet, the company is teetering on the edge of oblivion, triggering a domino effect of business closures, a surge in unemployment, and a catastrophic drain on public funds…a financial meltdown that Eskom has masterfully fast-tracked with lightning-like speed.