The newly appointed board of state-owned ports and rail operator Transnet has been given three years by public enterprises minister Pravin Gordhan to boost governance at the entity that has been weakened by poor management and performance, as well as years of state capture and corruption under its former executives and board.
The new board will be headed by Andile Sangqu, a former Anglo American executive and vice-president of the Minerals Council, signalling the government’s desire to appease the mining sector which has been critical of Transnet’s dysfunction that has cost the industry and economy billions of rand.
The Minerals Council, which accounts for 60% of Transnet Freight Rail revenue, estimates that the entity’s lack of capacity to adequately move bulk minerals cost miners R50bn in lost revenue in 2022.
Sangqu replaces Popo Molefe as chair who, along with President Cyril Ramaphosa’s national security adviser Sydney Mufumadi have been retained from the previous board.
“The Minerals Council looks forward to establishing a working relationship with the new board as Transnet, business and the government strive to stabilise rail and port performances and grow the capacity of these export channels to provide a cost-effective and efficient logistics platform for the mining industry and broader economy,” the organisation said. The council, together with other business organisations, is working with the government through the national logistics crisis committee to fix SA’s logistics sector.
The crisis committee has seven work streams to co-ordinate approaches between the government and business to tackle challenges in the logistics sector. These workstreams include the restructuring of Transnet, procurement and financing, improving road transport operations and border transit and strengthening security at Transnet, according to presidency spokesperson Vincent Magwenya.
Business Unity SA (Busa), whose members form part of the national logistics crisis committee, said the restructuring of the board is only a part of fixing the issues at Transnet.
“There is an initiative between Busa and the presidency to address the crises in logistics and transport. Transnet should be a critical participant in this initiative,” Busa CEO Cas Coovadia said.
“We would expect this to be top of mind for the board because we remain convinced an essential element of addressing the crisis at Transnet is for business and Transnet to partner, with utilisation of capacity and resource in business and opening up space for greater private sector participation.”
Other appointments include Sincpoint CEO Lebogang Letsoalo; Experion Global executive director Martin Debel; presidential climate commission head of finance Dipak Patel; Association for Savings and Investment SA CEO Busisa Jiya; legal consultant Mosadiwamaretlwe Pearl Zambane; Engineering Council of SA president Refilwe Buthelezi; human resource executive Boitumelo Sedupane; and Black Business Council chair Elias Monage.
In May 2018 Gordhan appointed an entirely new board at Transnet in an attempt to clean up governance after years of state capture. The new board’s 12 independent non-executive directors and two executive directors were tasked with tackling years of corruption allegations while also improving Transnet’s management of its rail, port and other assets.
However, since then former CEO Siyabonga Gama was fired; Vivien McMenamin resigned; Tau Morwe, who was acting CEO after Gama’s exit, left after his contract expired; Edward Kieswetter resigned to become head of the SA Revenue Service; Joyce Ramasela Ganda resigned; Oupa Motaung died; Gratitude Ramphaka resigned; and Louis von Zeuner retired.
The government has previously announced a road map to outline reform of the ailing entity, which includes increased private sector participation in the logistics sector, as well as the establishment of a separate infrastructure manager at Transnet Freight Rail.
The appointment follow concerns by asset manager FutureGrowth and the Institute of Directors in SA (IoDSA) about the positions on the board which have been vacant for over a year. “As noted previously, boards, and especially those of our struggling SOEs, need to have a full range of skills and diversity at board level in order to fulfil their mandate effectively,” said CEO of IoDSA Parmi Natesan.
“The appointments are a step that underscored the government’s commitment to infuse the state-owned company with the requisite skills, experience and business acumen,” Gordhan said. “The newly reconstituted board will help propel Transnet’s strategic transformation and the execution of its mandate as a critical cog in the SA freight and logistics domain, as well as a key driver of SA’s competitiveness and economic dynamism.”
The African Rail Industry Association said the appointment of Sangqu as the chair of the new board is a step in the right direction as his experience at the Minerals Council and Anglo American provides for great context for the challenges facing both Transnet and importantly the upstream economy.
“We hope that the board focuses attention on the grass-roots rail operational efficiency and performance of Transnet,” the African Rail Industry Association said in a statement.
“That it focuses on modernising the network operating systems and signalling systems and that most importantly it brings transparency into the true state of the national railway infrastructure which has suffered from years of poor maintenance,” the association said.
With Garth Theunissen
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