JOHANNESBURG — Two top executives have resigned from South Africa’s state-owned ports and rail company amid a deepening crisis that is proving to be a drag on Africa’s most industrialized economy.
Transnet, in a statement on Friday, said Portia Derby would step down as its chief executive officer from Oct. 31. It also announced the resignation of its chief financial officer, Nonkululeko Dlamini.
Transnet, which brought in $36.4 billion in revenue in the 2022/23 fiscal year, is contending with a shortage of freight trains and inefficient ports that has cut income from exports, particularly mining. It has also been hit by cable theft and vandalism of its infrastructure.
Semafor Africa on Tuesday reported on the extent of problems at Transnet and details of plans to impose strict cost-cutting measures across government departments due to the combined impact of its inefficiencies and problems at state energy utility Eskom
Michelle Phillips, who is currently chief executive of Transnet Pipelines, will take up the role of acting CEO in the wake of Derby’s resignation, Transnet said. It also said Hlengiwe Makhathini had been appointed as the acting CFO.
As I reported earlier this week, Transnet’s problems have created a headache for the government due to the impact on the economy. The finance ministry is struggling to manage a sharp drop in tax revenues, a large proportion of which traditionally come from the mining sector.
We also pointed out that around 35,000 coal mining jobs are at risk because companies, unable to transport millions of tons of commodities for export to ports, are scaling down their operations. A day after the Semafor Africa story, Bloomberg reported that mining company Glencore and South African energy firm Seriti were in talks to cut hundreds of jobs because their ability to export coal had been stymied by inefficiencies. “The situation is very dire,” the National Union of Mineworkers said in a statement, calling for President Cyril Ramaphosa to intervene. It looks like Derby — who for months was clinging on — has finally given up.
Also on Wednesday, the company said severe weather had disrupted rail services on its Cape Corridor, which is the main line for manganese exports and agricultural commodities. In short, the company’s problems are coming thick and fast. It was only a matter of time before the CEO went.
Transnet’s travails have highlighted the ANC’s poor management of the economy and the extent to which state companies have fallen apart in recent years. Looking ahead, the economic problems spawned by the failures of Transnet and any resulting cuts to government services, could prompt voters to punish the ANC in next year’s general election.
- The chaos at Transnet is demonstrated by the existence of a network of its employees and private players who run so-called “ghost trains” which, News 24 reports, run outside of the formal schedule with no revenue flowing back to the company.