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Transnet derailment a huge threat to South Africa

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Picture: Marie Strachan / ANA file – Transnet Rail Engineering’s wagon maintenance facility at South Dunes in Richards Bay. Public Enterprises Minister Pravin Gordhan has admitted to Parliament that 3,636 kilometres of the country’s railway tracks ‘have fallen into disuse between April 1994 to the end of November 2023’, the writer says.

By Kim Heller

Transnet, like many other State-Owned Enterprises, is in a state of chronic neglect and collapse. The derailment of Transnet is but one track in the sorry record of South Africa’s Minister of Public Enterprises, Pravin Gordhan.

After being quizzed by Members of Parliament, Gordhan admitted that 3,636 kilometres of the country’s railway tracks “have fallen into disuse between April 1994 to the end of November 2023”. The scale and nature of the Transnet crisis is titanic, and without remedy will plunge South Africa into a deeper abyss of economic and infrastructural ruin.

The Financial Times’ Joseph Cotterill penned an opinion piece on the plight of Transnet in October 2023. Cotterill wrote, “the 20,000km of railway that criss-cross South Africa once symbolised the nation’s mining might, carrying trains loaded with coal and iron ore destined for India, China, and other markets` under the state’s Transnet freight monopoly. But the volume of cargo carried by Africa’ s biggest rail network has collapsed by a third in the past five years.”

He continues, “In a mirror of the disarray at the Eskom power monopoly, officials and business leaders are working to turn around the management turmoil and alleged corruption that has left Transnet beset by train line vandalism, cable theft and blockages at ports. The crisis has throttled crucial commodity exports in the continent’s leading industrial nation, threatened thousands of mining jobs and hit badly needed tax revenues”.

Railway tracks don’t simply fall into disuse. The collapse of Transnet is not a natural or inevitable occurrence. Rather it is a direct and practical outcome of several factors. This includes a ruinous stretch of inadequate maintenance and investment, the miscarriage of mismanagement, and the train-wreck of endemic corruption and crime.

Further, the fact that Transnet, like other SOE’s, has never been optimised by the ANC government, to serve the developmental and transformational agenda, has contributed to its decline. The inadequate repurposing of SOE’s to service and serve the new democratic contours, will be costly in the end, not only to the ANC but the people of South Africa who were promised a better life.

Economist and thought leader, Trevor Ngwane, argued that the collapse of SOEs is an outcome of ANC’s political and economic policy failures. In an opinion piece published in Independent On Line (IOL) in March 2023, he writes that “the irony is that it is mostly the black working class and the poor – ANC voters – who benefit from efficient and well-run SOEs, and who suffer the most when the entities are badly run, corrupt and a drain on the public purse”.

The consequence of a Transnet collapse is dire for the economic health of South Africa and her people. Recovery and growth prospects are derailed. A country that cannot run its rail network efficiently is a country that is wholly off-track. A nation that cannot efficiently move people, products and produce is one that is stuck in a prosperity-paralysis.

An economy that is investment-immobilised will remained jammed in a dead-end of decline. The cost to the economy is significant. Not only are jobs being shed, transport costs raised to prohibitively high levels for commuters, but revenue from exports and international trade is being severely curtailed, and key economic sectors such as manufacturing are being placed under enormous strain. Estimates by the GAIN Group are that the Transnet crisis cost the country as much as R1 billion a day in 2023. This is mostly due to lost sales of coal and iron ore.

Minister of Public Enterprises, Pravin Gordhan also informed Parliament that over the period from 2019 to 2023, the theft of more than 4,600 kilometres of copper cable has disrupted rail freight operations. The scale of this flagrant, open-air looting is symptomatic of the apocalyptic level of pilfering in current day South Africa which is bringing the nation to a standstill.

The DA’s shadow Minister of Public Service and Administration, Dr Leon Schreiber, wrote that “if one laid out the full length of copper cable lost just by Transnet in only four years, it would stretch across the breadth of the United States”.

Transnet is in a desperate state. It has debts of some R130 billion, and it posted a loss of R5.7 billion in its last financial year. Freight volumes have fallen sharply. The new Board of the entity has requested financial assistance from the National Treasury, to help put a turnaround programme in motion. “We’re still doing the numbers,” South Africa’s Minister of Finance, Enoch Godongwana said at last week’s pre-World Economic Forum briefing.

In truth, the government has little choice but to provide financial support for the cost of a Transnet collapse is serious business.

For years, Gordhan has not solved the problems at Transnet, or at other SOEs. Rather he is set to pass on the damaged goods to the private sector. Very soon he will be proposing the National State Enterprises Bill to Parliament. This will see the State Asset Management Company own and control the lion’s share of South Africa’s SOEs.

The ANC is at pains to say that this is not privatisation. President Cyril Ramaphosa has spoken of how the country’s seaport, rail and electricity infrastructure are critical strategic national assets and not for sale. But in the end, it looks like selling South Africa, piece by piece, for a short-changed penny, may not be a far-fetched conspiracy theory.

Author and academic, Noam Chomsky, explains the standard technique of privatisation; Defund, make sure things don’t work, People get angry, you hand it over to private capital. For now, the fate of Transnet is unknown. What is certain for now is that Ramaphosa’s bullet trains are a dream deferred.

Kim Heller is a political analyst and author of ‘No White Lies: Black Politics and White Power in South Africa’.

This article was written exclusively for The African. To republish, see terms and conditions.