Transnet Crisis – 5 Key Interventions To Stop The Bleeding, Save Jobs And Grow The Economy

Dear Editor

The ongoing operational crisis at Transnet is posing an existential threat to the country’s export competitiveness and unless urgent steps are taken to stop the bleeding, South Africa’s comatose economy could suffer permanent damage.

Part of the reason why Treasury has issued a red alert on the country’s precarious public finances is because commodity exporters, who contribute substantial tax receipts to the fiscus, have been unable to get their products to ports due to Transnet inefficiencies. Some of the exporters, especially in the coal sector, are now sitting on piles of product inventory because they are unable to transport it affordably to ports.

The crisis has become untenable to the point where independent analysts have concluded that Transnet inefficiencies are likely to knock 5% off GDP in 2023. As a consequence, jobs along the value chain are now at risk with projections showing that 35 000 jobs could be lost.

In view of the significant threat that the Transnet crisis is placing on the economy, the DA is proposing the following key interventions to stabilize the situation in the medium term:

1. Fire Transnet CEO, Portia Derby – Transnet’s woes have in part been a crisis of leadership under its current CEO. Derby has failed to address the operational inefficiencies, which over time, have had a compounding effect leading to the current crisis;
2. Unconditional opening of Transnet corridors to exporters – Transnet Freight Rail, Sizakele Mzimela – who also should be dismissed, has failed to deliver on its mandate. Exporters who have capacity, should be given unconditional access to Transnet corridors to transport their products;
3. Inter-agency law enforcement team – A dedicated inter-agency law enforcement operation (between SAPS, Hawks, army and Intelligence), solely focused on key Transnet corridors, should be put in place to deal with lawlessness along these corridors;
4. Moratorium on red tape – An immediate moratorium should be placed on red tape considerations such as BBBEE and localization on all procurement considerations at Transnet; and
5. Development of a long term recovery strategy – An audit on current operations must be immediately instituted with a view to developing a long term recovery strategy to get Transnet back on track and stabilize operations.

In pursuing these key interventions, priority should be placed on helping major exporters clear the product inventory backlogs that they are sitting with in their warehouses. The strategy to turn around Transnet should be based on clear timelines that take into cognizance that the well-being of the economy is dependent on resolution of the Transnet crisis in the shortest possible time.

Regards

Ghaleb Cachalia MP
DA Shadow Minister of Public Enterprises