It is discouraging to see layoffs in the resource sector as commodity prices fall, but also because mining companies are unable to supply the market with their output. Stockpiles are increasing due to problems with the rail and port services provided by Transnet, but they cannot be increased any further.
The only option is to reduce production, but this means excess labor.
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Read: Election year drains cash and jobs from South African mines
The logistics crisis is such a serious challenge for the economy that businesses and governments are working together at unprecedented speed to work on solutions. Through Business for South Africa, we have partnered with governments to mobilize resources to quickly resolve the most pressing issues, while supporting broad reforms to improve the functioning of the system.
The National Logistics Crisis Committee (NLCC) was established as a coordination mechanism and has been functioning for six months with the participation of more than 45 private sector experts and CEOs with deep experience in the railway, ports and road sectors.
Five workstreams have already been introduced to improve rail, ports, roads, border crossings and security operations. The government is leading his three work streams, which focus on policy, regulatory and legislative reform.
This process has already yielded results, with a 45% reduction in vessels berthed outside Durban Port and a 36% reduction in container ship berth times.
Corporate-funded security patrols and other resources are already helping to reduce accidents on the railways and, in turn, the number of canceled trains. With the intervention at the Lebombo border crossing, the number of vehicles processed increased from 1,600 to 1,900 per day.
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Short-term interventions can help alleviate the negative impacts, but the key task is to address the long-term outlook for the sector. As we have learned in the power sector, only deep structural reforms can bring about lasting changes in system performance.
The good news is that the NLCC has already produced an excellent guide on the necessary changes to the freight logistics roadmap and private sector participation framework, which has been approved by Cabinet.
This envisages a change from a proprietary system controlled almost entirely by Transnet to an open and competitive system with multiple operators.
The key challenge is to maintain momentum. In that regard, we await the appointment of a new leader for Transnet. The carrier has been without a permanent CEO and other key positions for almost six months.
political interference
In particular, the process of appointing a new CEO is underway, and some reports last week suggested the board was facing political interference in the process. This is unfortunate. If Transnet is to regain its role as an efficient and effective operator of rail and port infrastructure, it needs to have a synchronized and accountable board and management team.
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One very problematic feature of the way state-owned enterprises operate is that the board of directors can be overruled by the minister of the public enterprises sector in relation to top appointments.
This essentially renders the board incapable of functioning as it is unable to properly hold management to account, a problem we have previously seen in the Eskom context. It is therefore important that the political process focuses on how to support and empower the Board, rather than undermine it. After all, the government should be able to appoint board members as sole shareholders and then give the board the power to act.
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The next big challenge is Transnet's finances. There was some surprise that Transnet was barely mentioned in last week's budget speech.
Treasury has provided Transnet with a R47 billion guarantee to enable it to raise new debt, but only if Transnet brings in private sector partnerships as called for in the roadmap. There are strict conditions attached.
This guarantee will ensure that Transnet can meet its immediate obligations, but it is also important that it implements reforms that will enable the next steps in its financial repair.
The Treasury's approach appears to be to continue to push for sustainable reform, given the management of the country's public finances and the negative impact that Transnet has historically had on the Treasury.
The reform process was quick to gather resources and develop plans. There are also effective short-term interventions to improve performance. But that momentum is at risk if Transnet does not see a strong appointment, with a mandate to drive reform of the power company under the direction of the board.
I'm looking forward to an announcement soon so I can start working on it.
Busi Mavuso is South African Business Leadership CEO.