The CEO of Transnet Freight Rail (TFR), Siza Mzimela, has recently announced her resignation amidst mounting pressure from the Transnet board.
In a letter addressed to the staff, Mzimela expressed her gratitude for their dedication and highlighted the progress made during her tenure. However, the poor performance of TFR, with a significant drop in export volumes, has led to calls for her removal from both business and organized labour.
One of the consequences of Transnet’s failure has been the missed opportunity for the mining sector to benefit from the export commodity boom. While countries like Australia have capitalized on this boom, South African companies have forfeited an estimated R100 billion in revenue. This loss translates to a potential R40 to R50 billion in tax revenues for the state.
Mzimela, who was appointed by former Transnet CEO Portia Derby in 2020, has faced numerous challenges during her tenure. These challenges include a political dispute with a Chinese supplier, the impact of the pandemic, rising crime rates, and flood damage. However, there have also been signs of fundamental management failure, such as a lack of basic controls, outdated systems, and inexperienced staff.
In her letter to TFR employees, Mzimela acknowledged the difficulties the company faced in accessing spare parts for Chinese locomotives, resulting in a shortage of trains. The purchase of these trains by Transnet from China Railway Rolling Stock Corporation (CRRC) during the state capture era was marred by large-scale corruption, leading to frozen funds and unresolved disputes between CRRC, SARS, and the Reserve Bank.
Despite these challenges, Mzimela commended the resilience and dedication of TFR employees. She highlighted several achievements during her tenure, including the introduction of borderless trains with Mozambique, the inclusion of additional junior miners in the manganese sector, the establishment of a new manganese export line to East London, and the successful repair of the container corridor after flood damage.
With Mzimela’s resignation and the recent departure of CEO Portia Derby, Transnet faces a critical juncture. Minister of Public Enterprises Pravin Gordhan has acknowledged the need for skilled and experienced individuals to lead the organization. However, he also emphasized the importance of addressing the legacy challenges and implementing effective management practices to ensure TFR’s success.