Article

Transnet’s recovery plan must be implemented ASAP

JOHANNESBURG, SOUTH AFRICA

THE roadmap to reform Transnet and South Africa’s logistics system was debated in National Council of Provinces this week. The Transnet roadmap proposes plans to improve port equipment, the availability of locomotives, and the security of networks.

The aim of the roadmap is also to create a path for improving efficiencies and fostering competition in logistics sector and attracting investment from the private sector.

The necessary Transnet reform is long overdue. In the last years President Cyril Ramaphosa’s first term the logistics system had disrupted supply in South Africa. The transport and logistics system is something that our government must get right. It’s part of the infrastructure, and, as the Konrad Adenauer Foundation has argued, must be something the government is involved in and gets right.

According to Businesstech, the logistics system issues saw South Africa record historically low coal and iron-ore exports in 2023. This hurt South Africa’s economic productivity, contributing to dismal economic growth rates.

There are clashing opinions in parliament on how exactly Transnet should be reformed. However, the goal of President Cyril Ramaphosa’s executive remains clear: and that is to have the private sector playing a significant role in the operations of Transnet.

The far-left political parties, uMkhonto weSizwe (MK Party) and Economic Freedom Fighters (EFF) are opposed to the involvement of the private sector in the reform of Transnet.

“We now hear of private sector involvement in revitalising Transnet infrastructure. We are against that because it would make goods expensive for the poor,” Ms Seeng Mokoena of the MK Party said. The MK Party calls for “proper public investment in technology, upskills of its work force and accountable management. We can’t hand over our assets to profit driven companies,” Ms Seeng added.

There is a common misunderstanding regarding privatisation in South Africa, and in many countries around the world.

Political economist and author, Moeletsi Mbeki, once remarked that privatisation improves organisations. When an organisation is privatised, it does not mean that it will only benefit its owners. It benefits the society as well, because its profitability and expansion is good for job creation. If an organisation is privatised, it is less likely that it will be bailed out with taxpayers’ money.

When Seeng says “We can’t hand over our assets to profit driven companies.” Why not? This is a dogmatic statement that does not make sense. Almost everything she uses to sustain her life, was created by “profit driven companies”.

I’m open to private public partnerships at Transnet. It’s better than total government control, which has already caused harm to Transnet and South Africa’s economy.

There are South Africans who complain that the private sector is not coming on board in the efforts to reboot South Africa’s economy. Well, Transnet becoming a public-private partnership entity is one way to bring the private sector on board. The Transnet reform must be treated as urgent – to stabilize and restore certainty in logistics sector.

During debate at the National Council of Provinces, Mkhuleko Hlengwa of the Inkatha Freedom Party (IFP) said that the transport and logistics systems should be the facilitator of economic development.

The Democratic Alliance (DA) was sensible when its Frederik Badenhorst said that decentralization and private-public partnerships are the answer to South Africa’s transport and logistics systems.

Transnet’s roadmap is one of the very important policy documents as it seeks to revamp an industry that has been neglected and mismanaged. Its success can only be a reality if our leaders are wise enough to recognize that without such reform, South Africa’s economy will keep performing below its potential.

In this year’s Institute of Management Development (IMD) global competitiveness index, South Africa ranks in the bottom ten. This is not good, and the dysfunction and paralysis at Transnet has contributed to the weak, uncompetitive economy.

After liberalizing the energy sector during his first term – a major achievement I believe – President Cyril Ramaphosa should make the transport and logistics reform one of his priorities in his second that began in June this year.

Now that Ramaphosa governs with the DA and other coalition partners, he can get this done speedily.

The Minister of Transport, Barbara Creecy, seems determined to transform the transport sector for the better. She has said that she wants the private sector to play a significant role at Transnet.

Finance Minister Enoch Godongwana has been very conservative on bailouts of SOEs during his time in office. He’s a sensible finance minister.

Last year, he allocated R47 billion to Transnet as part of Transnet’s recovery plan. The R47 billion guarantee came with conditions though. Amongst the conditions, was that Transnet must introduce private-public sector partnerships.

The strategy of public-private sector partnership must be supported by every South African who wants real, consequential reform.

The opposing political parties, the MK Party and EFF, will not win this one, and they must not win it. SOEs should be exposed to markets to encourage competition and efficiency in South Africa.

Transnet’s recovery plan must be implemented as soon as possible. PM

This article was first published on Politicsweb.co.za. Buy Phumlani’s book Lessons from Past Heroes here, and subscribe to his YouTube channel here.

© PHUMLANI M. MAJOZI