The initial reaction and the views we express as industry representatives are based solely on the public announcement by Government on Friday 1 December 2023. We expect more detail will follow in the next couple of days and look forward to better understanding the complete allocation of the guarantees, deployment of capital, future sourcing plans and any conditions that the National Treasury may place on Transnet in the use of the relief provided by Government.
The urgency applied by Government to this decision and the inter-ministerial alignment by the Minister of Finance and the Minister of Public Enterprises are encouraging signs and sends a message of both commitment and urgency to the international community, investors, the private sector and the people of South Africa at large and indeed to every player in the South African economy, in confirmation of Government’s intent to stabilise and rebuild the transport, logistics and broader supply chain sectors as a top priority. The R47 billion facility guarantee is a development we welcome, as it may indeed activate the recovery of Transnet and in due course aid the positioning of an efficient, fully functional multimodal logistics system in the near future.
“As a platform for the recovery plan, the facility will go some of the way to reduce onerous refinancing risks that are otherwise looming, while also help to address liquidity issues for the SOE in the short to medium terms,” explains Dr Juanita Maree, CEO of the South African Association of Freight Forwarders (SAAFF). “The stronger position opens greater dynamics for Transnet in the search for better interest rates among a broader field of potential funding partners in the future, which would both potentially serve both maturing debt to be replaced by cheaper loans and indeed in the process of securing funding for the significant Capital Expenditure that will be required to adequately equip all our ports and the reconstruction of the rail system.”
The Transnet recovery plan is vital to the national economy and will act as a stimulus to ignite broader economic recovery and growth. The current infrastructure crisis and service incapacity at the ports is of material proportion, severely impacting national and international players in our economy. The announcement of the R47 billion guarantee facility is clearly also in response to calls by international conglomerates for Government to fix the issues or stand to suffer divestment by important companies in our economy, generators of significant Foreign Direct Investment (FDI), employing thousands of people who demand a stable manufacturing and trading environment as a fundamental requirement for continuation.
The world is watching and seeking clear signs of competency and reassurances from the South African government to the nation and the international community. The action of Government in mitigation of risk is not optional right now, but the start with the support to Transnet is an imperative at this point.
This is a perfect opportunity for South Africa to show it is a fast maturing developing economy, by reigning in governance issues. applying lessons learned in the way the reconstruction of Transnet is planned, funded, implemented, and managed. At this moment in our history, this action may and will define and seal our country’s reputation and risk profile in global markets.
“We see the action as the start of the building block for a transformed logistics system where the private sector and Transnet will collaborate to the benefit of all in South Africa,” concludes Dr Maree.