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It’s critical for our economic future that Transnet and Prasa get back on track

Mmusi Maimane
By Mmusi Maimane
16 Sep 2024
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The failures of Transnet and Prasa are not just numbers on a balance sheet. They represent lost opportunities for economic growth, jobs and an improved quality of life for South Africans.

In South Africa’s current political landscape, the need for accountability and action within state-owned enterprises (SOEs) has never been more urgent.

The recent revelations of R21-million in exit payments to former Transnet CEO Portia Derby and head of rail Sizakele Mzimela have sparked outrage in a country where millions depend on failing public services like rail transportation.

While Transnet refuses to disclose the structure of these payments, terming them confidential, South Africans are left to wrestle with the broader issue: not only corruption but inefficiency and low performance within SOEs.

The debate beyond corruption


South Africa is having an active and necessary debate about corruption, with new revelations almost every weekend. Corruption has become a focal point of national discourse, overshadowing other critical issues.

But now, it is time for a paradigm shift – one that moves beyond just exposing graft and mismanagement. The conversation must evolve to include performance, infrastructure and the competency of the state. If the sixth administration was about State Capture, the seventh must be about performance and delivery.

SOEs have suffered not just from corruption but from chronic underperformance. In sectors like logistics and rail, this underperformance has stifled South Africa’s ability to expand its export and import markets.

Further, the passenger rail sector has failed to provide affordable, reliable transportation for the millions of South Africans who depend on it for their daily commutes. This failure has contributed to South Africa’s grim unemployment figures, where 33.5% of the working population (8.4 million people) are jobless, and the expanded unemployment rate, which includes discouraged job seekers, stands at a staggering 42.6%.

SOE inefficiencies: a barrier to economic growth


Transnet, South Africa’s transportation and logistics giant, plays a pivotal role in driving economic growth. By providing critical port, rail and pipeline infrastructure, Transnet is the backbone of the country’s international trade performance.

However, inefficiencies have crippled this SOE. Transnet’s underperformance has resulted in an annual economic loss of R385-billion, with a debt burden of R130-billion and a loss of R37.6-billion due to the unavailability of locomotives. These are staggering numbers, further compounded by security challenges and financial mismanagement.

The Passenger Rail Agency of South Africa (Prasa) is in a similarly dire state. Prasa’s inability to manage its capital budget due to a depletion of project management and engineering capacity has left millions of commuters stranded, with trains that are either late or nonexistent.

These failures are not just numbers on a balance sheet. They represent lost opportunities for economic growth, jobs and an improved quality of life for South Africans.

The path forward


As South Africa grapples with low economic growth and record unemployment, the focus of the government must shift. Fighting corruption is crucial, but it should not be the sole objective. The real challenge lies in crafting a sustainable, inclusive economic strategy that addresses inefficiencies in key sectors like transport and logistics.

SOE reform is paramount, but so too is finding new ways to work with the private sector to address these inefficiencies.

There are several key initiatives that the government must prioritise:

  1. Devolution of rail to capable metros: In May 2022, Cabinet passed the White Paper on National Rail Policy, which committed to devolving rail services to competent metros. The National Devolution Strategy, once finalised, could increase the efficiency of the country’s rail services, benefit commuters and stimulate local economies. This is an urgent reform that should be pushed to completion;

  2. Data-driven strategies for infrastructure maintenance and crime prevention: The Department of Transport must collaborate with National Treasury, Transnet, Prasa, the South African Police Service and private sector players to develop smart, data-driven approaches. This would modernise rail infrastructure and improve train tracking systems, leading to reduced delays and theft; and

  3. Private sector participation framework: A long-overdue framework is needed to guide the interaction between SOEs and the private sector. Private companies can bring both capital and expertise, helping to modernise and improve the efficiency of South Africa’s crumbling infrastructure.


Broader economic implications


The low performance of SOEs like Transnet and Prasa goes beyond just operational inefficiencies – it impacts South Africa’s economic potential. Chronic underinvestment in rail and logistics infrastructure limits the country’s ability to compete in global markets.

As a result, economic growth remains stunted, unemployment continues to soar and millions remain excluded from the benefits of a modern, functioning economy.

The time for action is now. While debates about corruption are necessary, they must not dominate the entire spectrum of acceptable discourse. We need a broader, more meaningful conversation – one that focuses on infrastructure reform, economic performance and the competence of the state to deliver.

South Africa cannot afford to be a country where corruption investigations make headlines, but growth initiatives remain stuck in endless discussions.

As Noam Chomsky wisely noted, “the smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum”. South Africa must push beyond this passivity, extending the spectrum to focus on unlocking the true potential of our economy.

If the government and society as a whole can shift their focus from merely exposing corruption to driving performance, accountability and infrastructure development, then South Africa has the potential to chart a new course – one where its citizens can finally reap the benefits of a growing and inclusive economy. DM

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