A fight for the heart and soul of Transnet is brewing, with freight rail boss Siza Mzimela reliably understood to be reluctant to fall on her sword amid pressure from the board to resign.
Business and government insiders told Business Day on Sunday that the writing is on the wall for Mzimela and that she is widely expected to be the next high-profile departure at Transnet after Friday’s abrupt announcement of the departure of CEO Portia Derby and CFO Nonkululeko Dlamini.
But those close to Mzimela said she would not leave quietly, adding that she feels she is being pushed out by big business over disagreements about a bid to concession “key and profitable” Transnet corridors.
Her supporters also said Mzimela believes the failures at Transnet Freight Rail (TFR) division should be blamed on “the inaction of those who had the power to urgently intervene or respond to management’s numerous requests to key and well-documented risks”.
Attitude
Her detractors, however, allege that Mzimela’s attitude is seen to be at the heart of the problem, as well as her alleged reluctance to consider recommendations from the private sector — made through the national crisis committee on logistics set up by President Cyril Ramaphosa — on how to resolve challenges on SA’s rail corridors.
Those corridors are essential to transport SA’s imports and exports, and inefficiencies could threaten the agricultural, retail, mining and automotive sectors, a highly placed source told Business Day on Sunday.
“She has been protected by Portia. With Portia gone, I do not see her surviving,” a source said.
“She has been the bully and her inability to take advice would make it impossible for her to stay,” another source added.
TFR is the company’s largest division, contributing almost 50% of Transnet’s revenue. It is also the most challenging division as it battles the escalation of theft and vandalism of its infrastructure as well as the lack of locomotives.
Labour federation Cosatu at the weekend added its voice to calls for Mzimela to be axed. The Minerals Council SA has previously called for the resignation of both her and Derby.
“The change needs to cascade down to TFR,” said Cosatu’s acting national spokesperson, Matthew Parks.
“Government needs to move swiftly to appoint competent permanent management. We think there’s a need to do likewise at Transnet Freight Rail. But new managers will only succeed if government gives the necessary financial, security and other support to Transnet.”
The shake-up at the state-owned logistics and rail company come after a call by public enterprises minister Pravin Gordhan last month for repercussions for persistent underperformance at Transnet.
“I asked the board to look into certain things.
“The board did its job,” Gordhan said in an interview with Business Day on Sunday.
Turnaround
Business for SA’s Martin Kingston added that it is essential “the executive at Transnet is stabilised as soon as possible to implement a Transnet turnaround plan. An appropriate suitable executive management can implement a turnaround that leads to a growth strategy.”
Michelle Phillips, CEO of Transnet Pipelines, will replace Derby on an acting basis until a permanent replacement is found and Hlengiwe Makhathini will act as CFO in Dlamini’s place.
Derby, Dlamini and Mzimela all joined Transnet in 2020 as part of the move to root out corruption and to put the company on a sound footing.
However, the financial position has continued to deteriorate, prompting various business lobby groups, including the Minerals Council, the Durban Chamber of Commerce and labour unions to call for the firing of the executive.
Transnet’s R5.7bn loss for the 2022/23 financial year was largely driven by TFR’s worsening performance.
Rail volumes dropped 13.6% from 173-million tonnes in 2021/22 to 149-million tonnes.
Urgency
When asked specifically about the need for Mzimela’s resignation, Kingston suggested that it is necessary.
“Work can only be implemented and expedited with the support of the executive management that is fully committed.”
On the way forward, Gordhan called for urgency. “We want to encourage people to make themselves available. The board must deal with the matter with the necessary urgency. As long as I am around there will be no improper influence,” he said.
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