South Africa: Transnet Successfully Concludes Operational and Financial Turnaround Strategy
Cape Town — Transnet, the South African government-owned company responsible for rail, port, and pipeline operations, has announced the completion of its turnaround plan. According to eNCA, the plan includes measures to improve operations and finances within the next 18 months. The focus on freight rail is expected to help recover from the reported loss of approximately $398 million (R7.5 billion) in September 2023. The strategy will be presented to shareholders this week.
Transnet has been facing challenges for several years, resulting in a decline in transportation services, particularly passenger rail, which was transferred to the Passenger Rail Service of South Africa (PRASA).
Recent weeks have seen significant resignations within Transnet, including CEO Portia Derby on September 27, 2023, and Chief Financial Officer Nonkululeko Dlamini, who departed after serving a month’s notice. Daily Maverick reports that the organization is currently lacking leadership.
Minister of Public Enterprises Pravin Gordhan previously set a deadline for Derby to turn the parastatal’s fortunes around. Critics have called for decisive action from Gordhan in response to the crisis at Transnet.
Siza Mzimela, the CEO of Transnet’s freight rail division, has faced pressure to resign due to the inefficient and unreliable nature of the company’s rail network under her leadership, as mentioned by Ray Mahlaka in Daily Maverick.
Fikile Mbalula, the Secretary-General of the African National Congress (ANC), defended Gordhan against criticism that he is responsible for the crisis facing state-owned enterprises (SOEs) in the country.
According to a study by South African research consultancy GAIN Group, the country’s declining rail and freight infrastructure is costing the economy approximately R1 billion per day.
After Transnet reported a loss of $300 million (R5.7 billion) in its 2022/23 financial results, Gordhan gave Derby a three-week deadline, starting from September 1, 2023, to develop a turnaround plan. It remains to be seen whether these efforts will successfully enhance port and harbor operations and the transportation of goods, which are crucial for the country’s development.
