By Solly Phetoe
The past decade has been brutal for South African workers, yet we are finally beginning to see hopeful green shoots at Transnet under the ANC-led government interventions that are being prioritised by President Cyril Ramaphosa.
Transnet, like Eskom, is the backbone of the economy and South Africa’s industrial development.
It is intrinsically linked to our mining, manufacturing and agricultural sectors and the most efficient and cost-effective way for them to transport their products to their domestic and international markets.
These sectors employ more than three million workers directly and help sustain many more jobs in their value chains as well as in the broader economy. Transnet alone employs nearly 50 000 workers.
The decade of state capture saw Transnet being targeted for looting with tenders, locomotives, repairs and maintenance, copper cables, payrolls … literally everything being targeted for pilferage by criminal syndicates, inside and outside, and from the highest positions of authority.
The consequences of this industrial-scale criminal spree have been devastating. At the height of this moment of national shame, Transnet was transporting half the goods it was in 1994, despite the economy having doubled in size since then.
In November 2023, the fiscal costs of this crisis were brought to the fore with a revenue shortfall in the Medium-Term Budget Policy Statement tabled at Parliament of a painful R55 billion, 56% of which was directly as a consequence of the impact Transnet’s declining performance was having on the mining industry.
This revenue decline meant the state struggled to fund the salaries of nurses, teachers and police officers among others. It meant the state had to cut monies earmarked to fund infrastructure upgrades the economy needs. It meant there was less money that could have been used to expand public employment programmes or the National Student Financial Aid Scheme to help young people acquire the education, skills and experience needed to find work.
With Eskom having made tangible strides and firmly on the path to recovery, Transnet has become our number one economic challenge.
The backlogs exporters and importers had experienced getting their goods through Transnet’s ports meant the mining sector missed out on two commodity booms and were reduced to stockpiling exports and in some cases, suspending operations.
This led some mining companies to retrench thousands of mineworkers. The agricultural sector struggled to get their products to overseas markets, leaving many products to simply expire, bleeding an already fragile industry.
Automotive exports were left queueing, sending a depressing message to overseas investors in an increasingly competitive sector internationally about the viability of future investments in South Africa.
Clothing factories dependent on getting fabric through our ports came to a standstill.
Many companies simply moved their goods to ports in neighbouring states, threatening South Africa’s strategic advantage as the gateway to the continent in addition to the competitiveness of our exports for international markets.
In short, a calamity for thousands of workers and their families, local businesses and key economic sectors, and a fiscus in desperate need of revenue.
This tipping point saw concerted interventions by the Presidency and the government to turn Transnet around. Extensive engagements took place with business and labour, and additional measures were put in place.
Key actions undertaken included a replacement of Transnet’s leadership, a loan guarantee from the state of R57bn, purchasing badly needed modern cranes, tugboats, digitisation of operations, and banning of scrap metal exports among others.
While we are not out of the woods, we have begun to see signs of improvement after the government’s interventions to halt what was becoming a dangerous downward spiral.
Key signals of a turnaround in the first quarter of 2024 compared to the same period in 2023 include:
• 7% rail volume growth
• 4% increase in port container volumes shipped by Transnet Port Terminals
• 7% increase in locally manufactured cars being shipped through our ports
• waiting times at the Port of Durban falling from 10 days last December to below six days in July
• waiting times at the Port of Cape Town decreasing from eight days in March to three days in July 2024.
• N4 corridor (Pretoria to Maputo) average long-distance truck transit times reduced from 26.3 hours in 2023 to 22.4 hours in 2024
• N1 corridor (Cape Town to Beitbridge) transit times cut from 64 hours in 2023 to 33.7 hours in 2024.
A breakthrough on sourcing spare parts to repair damaged locomotives appears to have been achieved ending the debacle where Chinese manufacturers refused to supply parts in protest at being served with a tax bill by the SA Revenue Service.
More needs to be done to ensure our ports rank among the world’s best and not the laggards they have been in recent years, to ensure we unlock our economy and slash unemployment.
Particular attention is needed from the SAPS, National Prosecuting Authority, Special Investigating Unit, State Security Agency and the courts to eradicate the corruption still embedded in many parts of Transnet as well as the criminal syndicates who have done so much damage to Transnet, Metrorail and Eskom’s infrastructure in their efforts to strip copper from cables among other parts.
It is equally critical that the government and Transnet engage the workers at the logistics entity, who fear moves to bring on board private operators will lead to privatisation, salary cuts and retrenchments.
These workers are the key to Transnet’s turnaround and are its most valuable asset.
They need to be reassured that Transnet will remain a state-owned enterprise where their jobs and salaries are secure. Transnet’s modernisation and its ability to attract more goods on its trains and through its ports requires more not less workers.
Improving workers’ salaries and offering performance bonuses will boost turnaround times, further enhancing Transnet’s ability to attract customers.
In short, Transnet needs its workers to succeed.
Cosatu with its affiliate, Satawu, will continue to push the government to fix and rebuild Transnet to ensure it will once again be the engine of a growing economy. This is a battle we cannot afford to lose.
Solly Phetoe is the General Secretary of Cosatu.
BUSINESS REPORT