Transnet Chairman Popo Molefe has made important commitments that show that the state-owned logistics company could improve governance faster than skeptics would have it.
Commenting in the Transnet’s 2019 Annual Report, Molefe has, in the wake of state capture, said the company has committed to ridding itself of corruption. He points out that the nature and pervasiveness of state capture have perplexed the minds of rational, ethical human beings.
Similarly, addressing Parliament's portfolio committee on public enterprises recently, Molefe spoke of the lingering shadow of state capture, even as the entity works to improve its audit outcomes and credit rating.
He is right: we are still perplexed by what happened. It is difficult to believe that people could rig tenders of such magnitude – allegedly with little or no oversight, according to evidence heard at the state capture inquiry – and hope that it would never come out. Corruption even infiltrated the company’s Treasury department, the financial heart of any organisation.
This has hopefully raised the alertness of many South Africans. We should jealously safeguard public assets that are key to the economic wellbeing of the country and make sure state capture does not rear its head again. We must do this as a mark of economic patriotism as opposed to the economic sabotage that was the hallmark of state capture.
From all that emerged during the Zondo Commission of Inquiry, Molefe says, "It appears corruption has become a culture within SOC’s (state-owned companies) and across the national spectrum."
Funds to tackle corruption
Molefe offers advice on how to deal with the scourge of corruption beyond normal investigations and commissions of inquiries. "It may well be helpful for the state to create a fund and forum for the widespread re-education of our people about the impact of corruption," he writes in the Transnet report.
I would add that it’s not only the state that should do this; the private sector should also make a contribution. Introspection is required among all economic players. Ethical business practices should not be negotiable.
By proposing a widespread re-education in ethics, Molefe shows he is optimistic that things can change. He makes what appear to be obvious but nonetheless a brilliant observation we should all take notice of: "We cannot detach corruption from human choice." In fact, many of the challenges we face as a country have to do with the choices we make.
We know what are the right things that need to be done. We know what should be in the interest of the nation and what’s in the narrow interest of individuals and groupings.
We also know that individuals and groupings standing for their own selfish interests have a sophisticated, illegal and unethical way of behaving as if their interests are necessarily those of the nation. The question of "human choice" is fundamental to the national economic interests. It has implication for national choices too.
Molefe reaffirms Transnet’s mandate. He states: "Our purpose is to make the country commercially competitive in a rapidly changing global context by lowering the cost of doing business in South Africa, enabling economic growth and ensuring security of supply in providing ports, rail and pipeline infrastructure in a cost-effective manner."
The rail and ports aspects of Transnet’s competitiveness is crucial for the mining sector. The commitments regarding the coal sector, as detailed in the Transnet annual report, are commendable. The company plans to improve its Wagon Cycle Time for coal from the current 64. 2 hours to 63.8 hours. It is being realistic after it missed the 2019 target of 58 hours.
The service to the coal sector as well as other bulk minerals is critical to Transnet Freight Rail, the company’s biggest division that accounts for 59% of Transnet’s R74.1 billion revenue. There is a mutually beneficial relationship between the coal producers and Transnet. South Africa’s coal economy is dependent on Transnet Freight Rail, which employs over 31 000 people countrywide.
It is encouraging to read Transnet management’s comments in the annual report that the company is committed to generating strong cash flow, maintaining affordable levels of debt without government support, and reporting year-on-year improvement in financial performance.
This provides comfort that the industry sectors supported by Transnet will continue to get required service as its governance challenges are being tackled. Transnet has an opportunity to bring credibility to the idea that the state has the ability to run a complex logistics company in the interest of the economy as a whole.
Bayoglu is the executive chair of Canyon Coal. Views expressed are his own.