The Democratic Alliance (DA) acknowledges Transnet’s appeal for the South African government to absorb its substantial R130 billion debt burden. This situation bears a resemblance to Eskom, demonstrating an inability to repay its debt and the need to borrow more to barely remain operational. Following Eskom’s debt relief scheme, where a staggering R254 billion in debt will be shifted to the national balance sheet, Transnet is seeking a similar solution. This request was reportedly officially presented to Minister of Public Enterprises, Pravin Gordhan, and Finance Minister, Enoch Godongwana, during a joint presentation on the so-called turnaround strategy of State-Owned Entities (SOEs).
Earlier this year, when the Treasury agreed to take on a significant portion of Eskom’s debt, the DA cautioned that it would set a dangerous fiscal precedent, with other financially unsustainable SOEs seeking taxpayer-funded relief.
The DA remains opposed to the absorption of Eskom’s debt, as it recklessly exposes taxpayers to the financial consequences of government mismanagement. The same applies to Transnet and every other dysfunctional SOE.
The ANC must confront the inconvenient truth that Transnet, much like every other SOE, is a haven for systemic inefficiency, corruption, and economic imprudence. Despite receiving nearly R6 billion in previous bailouts, the entity remains unviable and stands as a massive impediment to achieving sustainable economic growth. The entity doesn’t even have sufficient interest cover to service existing loans, let alone take on new ones. Moreover, independent analyses project that Transnet’s operational inefficiencies cost South Africa up to 5% of its GDP in 2023 and now jeopardize an estimated 35,000 jobs across various sectors.
Rather than indulging in this never-ending cycle of fiscal irresponsibility, the government must take responsibility for its shortcomings and implement substantive, yet necessary, reforms. Instead of persisting in a futile quest for more taxpayer money, the government must expedite the privatization of Transnet. Exporters with capacity should be granted unconditional access to Transnet corridors to transport their products. Moreover, the government must immediately suspend bureaucratic obstacles, such as BBBEE and localization criteria, in all procurement processes within Transnet. The business units under Transnet have no relevance in central management and ownership. They must be unbundled, and innovative public/private partnerships should be sought to own and operate them as a precursor to privatization. Such measures are crucial for instilling the incentives that drive operational efficiencies, which are essential for revitalizing the entity to the benefit of all South Africans.
Minister Godongwana must reject this latest appeal from a poorly managed, cadre-ridden institution. On the 1st of November, the Minister has the opportunity to make good on his promise to cease the endless bailouts to moribund SOEs and prioritize South Africans instead. Fiscal discipline and prudent financial management must take precedence if we are to secure a stable, prosperous future for every South African.
By Ghaleb Cachalia MP and Dr Dion George MPf
