Latest news with #BusinessLeadershipSouthAfrica
IOL News
21-07-2025
- Business
- IOL News
Transnet faces mounting pressure as R13. 5bn cash burn prompts reform calls
Busisiwe Mavuso, CEO of Business Leadership South Africa, criticises Transnet's financial mismanagement, warning that its R13.5bn cash burn could threaten South Africa's economic stability. Image: Simphiwe Mbokazi/Independent Media Business Leadership South Africa CEO Busisiwe Mavuso has slammed Transnet's continued financial collapse and resistance to reform, following a damaging credit downgrade by S&P Global. Last week, IOL reported that the global rating agency downgraded the state-owned entity's credit ratings amid rising debt concerns and ongoing cash flow deficits. The rating agency also reduced the company's long-term local and foreign currency ratings from BB- down to B+, while its standalone credit assessment slipped from 'b' to 'ccc+'. In her weekly newsletter on Monday, Mavuso pointed out that the state-owned entity was burning through around R13.5 billion in cash annually and consistently failing to meet its freight volume targets. "This downgrade is not just a reflection of Transnet's financial distress – it is a damning indictment of years of failed leadership, union militancy and a government that continues to bail out state-owned enterprises without demanding fundamental reform," Mavuso said. She also noted that Transnet's financial difficulties are exacerbated by high fixed costs, significant capital expenditure requirements, and growing debt burdens, which have eroded investor confidence. "Transnet is seemingly resisting change and moving too slowly. This compares to Eskom, which has been able to stabilise its operating performance and is pushing forward deep and fundamental reforms," she added. "The solution is not more bailouts or government guarantees. It's time for the National Treasury to attach strict conditions to any future support" Mavuso also added that Private sector partnerships in ports and rail concessions must be accelerated. "Companies are ready to invest in our logistics infrastructure, but they need certainty that political interference and Transnet's resistance won't undermine their investments." IOL Business [email protected] Get your news on the go, click here to join the IOL News WhatsApp channel
IOL News
17-07-2025
- Business
- IOL News
Old Mutual's economist dashes hopes for the required 6% economic growth in South Africa
Busisiwe Mavuso, CEO of Business Leadership South Africa, said the GNU was showcasing notable progress in creating a more conducive business environment. Image: Leon Lestrade/ Independent Newspapers Old Mutual Group chief economist, Johann Els, has quashed any lingering hopes for sustained growth rates of 6% in the country's gross domestic product (GDP) on the back of significant lingering structural constraints. Though Els on Thursday said he was expecting an 'improved growth trend' in the outlook for 2025 for South Africa, the economy was faced with serious structural constraints, which had resulted in the average annual growth rate of 1.1% over the last 16 years. 'I do expect that uplift in that growth underlying trend towards 2.5% to 3% on the back of significant private sector participation in the economy. And it's not always easy to present a slightly better growth outlook,' Els said during a midyear economic update. 'But in my view, this isn't an optimistic outlook. It's a balanced view that we should see better underlying growth because we are making some headway into reducing the structural constraints in the economy. 'But to be clear, growth around 5% to 6%, which is what South Africa actually needs, will never happen in South Africa. It's highly unlikely to ever get, on a sustained basis at least, towards 5% or 6% economic growth. Highly unlikely. But we can get from around 1% slightly less volatile growth as well towards 2.5% to 3%. 'We've got significant structural constraints in the labour market, significant skills deficit, and an over-regulated labour market that will prevent us from ever achieving that.' However, Els said what was happening in terms of electricity, water and logistics reforms will get the economy from 1% towards 2.5% to 3%. He said that will make a material difference in terms of confidence and profitability, driving to some extent, even employment growth, positive employment growth despite those structural issues in the labour market. 'So growth can start to improve over the next few years, where especially the reduction in the electricity deficit will help significantly. Gradually, the private sector's role and participation in the logistics arena, helping out the Transnet issues,' Els said. 'Foreign investors are always looking at more stable countries. If we look at the big reason for weak economic growth over the past 16 years or so, the lack of confidence in policymakers,' Els said. 'When growth was strong in that period roughly in the early 2000s towards 2007-08, that was a period when there was little concern about politics and policy. The result of a survey done by the Bureau of Economic Research at Stellenbosch University asking businesses what their view of the political climate and policy climate [shows] that concern moved up dramatically, economic growth collapsed, and a Reserve Bank study showed that growth would have been more than 2%. 'Now, what we have seen is after the formation of the Government of National Unity (GNU) in June last year, that concern has improved quite a bit, eased quite a bit, meaning more confidence in this new government to actually implement the better policies.' Busisiwe Mavuso, CEO of Business Leadership South Africa, said the GNU was showcasing notable progress in creating a more conducive business environment. Mavuso said as much as the country was facing so many geopolitical challenges and the impact of the Trump tariff regime, it has made quite a few strong strides and achieved solid wins in an effort to try and ensure a conducive environment within which business should trade. 'There are four network industries that we have: energy, transport and logistics, water, crime and corruption. And out of those four, three have been dysfunctional for quite a while, only telecoms have been functioning as it should,' she said. 'And now we are actually seeing progress coming along on the energy, on the transport logistics, and on the water front as it were. So as a business community, we are seeing a GNU that has been quite committed to delivery.' Mavuso indicated that hope lies particularly in the energy reforms, with the minister's commitment to achieving energy security rather than simply maintaining existing structures being prioritised. However, challenges are not absent as Mavuso said the mounting municipal debt remained a pressing concern, and the implications of union negotiations continued to draw scrutiny. 'Municipal debt continues to be a challenge, and [the Minister of Electricity] started intervening in municipalities. I don't know if you would have seen, three weeks ago, he secured the City of Joburg's commitment to pay R3.2 billion to Eskom over the next four years, and he's going to continue to do that with other municipalities because that Eskom debt by municipalities is growing at R3bn every month,' she said. 'And when you look at the work that is being done by Operation Vulindlela II, their focus on municipal reform is also going to be reinventing the electricity revenue of the municipality to ensure that that money can actually go to Eskom. So those are all encouraging things that we're actually seeing.' BUSINESS REPORT
Daily Maverick
16-07-2025
- Politics
- Daily Maverick
We will have to swallow bitter medicine to fix the financial health of our education system
This time last year, I took an oath to assume the office of South Africa's Minister of Basic Education. I did so with a clear conscience that I would hold this office with dignity and to the very best of my abilities. My first order of business was to listen deeply, to be guided by the evidence, and to reform strategically. Over the last 12 months, I have travelled the length and breadth of our country. I have, on average, visited one school per week. I've met provincial leaders and officials, school principals, teachers, parents and, most importantly, learners. Their stories and realities have shaped everything we have done since. Our work has been guided by a simple, yet powerful statistic: 80% of children in South Africa cannot read for meaning in any language by Grade 4. This has told me that we need to get the basics right. If our children cannot read for meaning by age 10, if they face unsafe sanitation, if they come to school hungry or unsupported in their earliest years, then everything else we do will fall apart as it is based on weak foundations. Strategic reorientation of the basic education system Based on the low levels of literacy and numeracy, we launched a major shift in how the Department of Basic Education approaches its work: the strategic reorientation towards improving the quality of foundational learning. Chasing surface metrics, such as the matric pass rate, will not move the needle in terms of the number of learners leaving the system with the skills needed to pursue further studies or enter the world of work. We need to get the foundations right if we are to see improved education outcomes across the system. Foundational learning cannot be a peripheral concern and must therefore be the centrepiece of our basic education reform agenda. Early childhood development: laying the first brick in the foundation In February 2025, I co-convened the Bana Pele Roadmap Summit with Business Leadership South Africa, which was opened by President Cyril Ramaphosa. This was a seminal moment in mobilising stakeholders around the importance of early learning. In partnership with Takalani Sesame, we are rolling out the Bana Pele Mass Registration Drive – a national campaign to register, formalise and support early childhood development centres, especially in the most underprivileged communities. Our goal here is bold: we want to register 10,000 centres by the end of the current financial year, to formalise them and to support them to comply with their local government health and safety requirements. We will furthermore subsidise them with R17 per child per day to ensure their financial viability. This is proposed to increase to R24 in the new budget. We won't stop there. We will also support them with age-appropriate learning and teaching materials required for children to follow a structured curriculum. Finally, we will then upskill practitioners to acquire a teaching qualification that would allow them to deliver a quality curriculum. In the Foundation Phase, we have continued rolling out the Mother Tongue-based Bilingual Education programme, training teachers in bilingual methods and providing quality support materials. The Funza Lushaka Bursary Scheme and teacher development efforts are being augmented to prioritise Foundation Phase teaching, aligned to our focus on literacy and numeracy. Furthermore, we are reviewing Post Provisioning Norms to improve teacher distribution and buffer provinces against budget pressures. We are also updating the National Catalogue for grades 1 to 3 to ensure learners receive high-quality, curriculum-aligned materials. Without these foundations, a child will face challenges taking on and excelling in gateway subjects like mathematics and science, or technical, vocational and occupational subjects. This, in turn, impacts on their ability to pursue higher learning and meaningful work opportunities. The mere introduction of entrepreneurship education, coding and robotics and the like is no magic wand. These subjects become accessible only when learners are literate and numerate. Nutrition reform with integrity We made a bold decision to halt a R10-billion per year tender that would have hyper-centralised the National School Nutrition Programme in the hands of a single service provider, thereby risking the wellbeing of 9.6 million learners who depend on the NSNP for their daily meal. The current model of delivering school nutrition will continue, and we will strengthen provincial capacity to deliver while we work on a revised, balanced delivery strategy. Infrastructure justice: sanitation first We are turning the page on pit toilets and moving away from one of the most painful chapters in our country: when children would fall and drown in pit toilets in democratic South Africa. In April, I announced that 96% of the pit latrines identified by the 2018 Safe Initiative audit had been eradicated. Today, that has increased to 97%. This eradication project is about dignity, safety, and our moral obligation to learners and their teachers. The work of identifying and eradicating unsafe sanitation facilities not identified by the Safe Initiative must continue by provincial education departments (PEDs). What the DBE is doing to support this: (a) Safe Schools Act; (b) focus on maintenance; (c) supporting PEDs with planning, development and maintenance; and (d) reviewing the Regulations on the Minimum Uniform Norms and Standards. A hard look at provincial finances In September 2024, we undertook a deep financial analysis of all nine provincial education departments. I will not hide the reality of our financial situation from the people of South Africa. In November 2024, I shared the findings of that analysis and informed the public that we are facing a fiscal crisis. Ten years of austerity measures have left our sector with a deep financial hole. If the current funding levels continue, we will see seven of the nine PEDs fall into the red and be unable to fund their budgets by 2028. I can assure South Africans that we will not fold our arms and lament the poor financial decisions of the previous administration. We are putting in place financial recovery plans and we are working with provincial and national treasuries to protect education funding and to ensure that provincial education departments can get back on their feet. I must again be honest with South Africans, this will be a painful exercise; we will have to swallow bitter medicine to fix the financial health of our education system. We will conduct nationwide audits to root out ghost teachers and ghost learners in our system; we will have to right-size departments to ensure personnel costs go back to under 80% of the budget. We find ourselves in a mess not of our making, but the mess is ours to resolve. Institutional and policy reform: the National Education and Training Council To enhance policy development in the sector, we are operationalising the National Education and Training Council. This advisory body will provide evidence-based recommendations to me as minister on a range of complex school education-related issues. These will include a review of the resourcing model applicable to schooling; exploring ways to reduce administrative burdens on teachers; and considering whether the progression and promotion requirements remain fit for purpose. This is not just another council of government. It is a structure provided for in law comprising specialists from a variety of disciplines related to education who will volunteer their expertise, knowledge and experience to ensure that national education policies are responsive to the realities on the ground. Looking ahead This first year in office has laid the groundwork and shown our strategic intent. But reform is about action, not just intent. It will take political courage and cross-sector partnerships to make this strategic reorientation a success. We must be willing to break resistance to the reforms the sector so desperately needs. We must accelerate support for teachers, scale early learning innovations and stabilise provincial spending. My message to every parent, teacher, learner and policymaker is this: we are building strong foundations for our schooling system that must work for our children. Let's walk this road together. DM
The Citizen
14-07-2025
- Business
- The Citizen
Government must intervene with US tariffs, act stronger with police corruption
There is no time for South Africa's government to drag its feet with responding to the US tariffs and corruption in the police. Government must urgently consider interventions to lower US tariffs as South Africa braces for the impact of them. In addition, people expected stronger action from President Cyril Ramaphosa to deal with the corruption in the police. Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says in her weekly newsletter that the notification from the White House that many of South Africa's exports will face 30% tariffs from August is 'deeply concerning'. 'While there may be scope to negotiate some reprieve, we must prepare for the worst-case scenario. Although exports from SA to the US make up just 2.2% of gross domestic product (GDP), some of that basket will be unaffected because there are specific exemptions, particularly for raw materials, such as platinum, gold, chrome and coal that the US deems critical. 'The most critical sectors to be affected are vehicles and parts, agricultural output, steel and aluminium (which faces 50%) and other manufactured goods. That will hit certain companies hard where they are significantly exposed to the US market.' ALSO READ: Ordinary South Africans will feel impact of US tariffs Businesses affected will find other markets, but it takes time She says some of those businesses will be able to find new markets for their output, but that takes time. In the short term, they will face a shock that will ripple through their supply chains. She said she worries about how the automotive sector will withstand this. She points out it is not just vehicle manufacturers, but the many parts manufacturers and other service providers who support them. 'Under the Trump tariff regime, vehicles and parts will get their own tariff of 25%. 'The US acquired R35 billion in luxury cars and components last year, with a third of that consisting of parts, many provided by relatively small businesses. 'The citrus industry is also bracing for a huge impact. South Africa has become the world's second-largest citrus exporter after Spain, but the biggest in the southern hemisphere, positioning it well for northern hemisphere winter demand.' ALSO READ: Trump's new 30% tariff less about trade and more about power The US market consumed around R1.8 billion of citrus exports, supporting about 140 000 jobs across the value chain. 'Add to that wine, beef and other exports and large parts of our agricultural sector will be hit. 'The critical question is whether affected companies can survive long enough to pivot to new markets. Shifting production capabilities and securing alternative import agreements takes years, not months. In the interim, hundreds of thousands of jobs hang in the balance.' Urgent decisions needed on US tariffs Mavuso says government must make urgent policy decisions. 'Much like during Covid, when companies were forced to close during lockdowns, the shocks are temporary. But losing companies and the thousands of jobs would be permanent. 'Then, government took the decision to support companies with loan schemes and support jobs with the Temporary Employer/Employee Relief Scheme (Ters). Similar interventions should urgently be considered to deal with the tariff fallout.' Of course, she says, government should also actively engage their US counterparts to find ways to avoid the full impact of the tariffs, but we must prepare for the worst. We cannot be left scrambling for a solution only after all other options have failed, she says. ALSO READ: Where Trump's tariffs will hurt most She points out that government's recent R753 million emergency funding for HIV programmes, necessitated by the US withdrawal of Pepfar, demonstrates a model for the challenge and response. 'While this represents only a tenth of Pepfar's previous spending, it shows government can move quickly when crises demand action. 'We must get ahead of this challenge. Government should immediately establish a tariff impact fund to support viable companies through the transition period while simultaneously working with affected industries to identify and develop alternative markets. Parallel diplomatic efforts with US counterparts remain important, but we cannot wait for their outcome.' Police corruption also needs urgent attention Turning to the governance crisis exemplified by the Senzo Mchunu affair, Mavuso says the crisis also demands urgent attention. 'The decision Ramaphosa announced last night to grant the police minister leave of absence is welcome, although proper suspension pending investigation would have been more appropriate given the serious allegations of lying to parliament and interfering in police investigations of political assassinations in KwaZulu-Natal. 'The president's appointment of Firoz Cachalia as acting minister does suggest an effort to put someone into the role without political baggage and is welcome. However, it would have been better to see stronger action. 'Just two weeks ago, the president dismissed a deputy minister for the relatively minor infraction of taking an overseas trip without final approval. If we fire officials for procedural violations, how can we treat potential obstruction of justice investigations with less severity?' Inquiry's recommendations must not gather dust again The commission of inquiry offers hope, provided it receives proper resources to support Acting Deputy Chief Justice Mbuyisile Madlanga, who has been appointed to head it, she says. 'The Nugent Commission on Sars and the PIC Commission successfully contributed to restoring those institutions, proving commissions can work when properly structured and supported. 'However, we cannot afford the delays and budget overruns that have plagued other inquiries, nor can we allow recommendations to gather dust like many from the Zondo Commission on state capture. Judge Madlanga will need to be swift and recommend immediate actions to suspend those who pose particular risk to the security services.' ALSO READ: Cameron questions urgency of commission into Mchunu probe Mavuso says this situation strikes at the heart of our criminal justice system. 'Police must have unwavering political backing to investigate crime without fear or favour. Any suggestion of political interference is devastating to public trust and emboldens criminal syndicates that have infiltrated our political systems. 'These networks must be dismantled and the president must lead this charge by ensuring police have his full backing to pursue investigations wherever they lead.'
The Citizen
07-07-2025
- Business
- The Citizen
Business partnership with government shows results
While the partnership between government and business is delivering progress, energy reform at Eskom must be accelerated. The partnership between business and government is showing results, with one of the positive features of the government of national unity the openness of ministers to engage with business. Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says in her weekly newsletter that a better understanding of each other's needs and objectives can help business and government make progress. She says the BLSA hosted the Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, who spoke to members about the progress of electricity systems reform. 'The legislative foundation for competitive electricity markets is now in place with the amended Electricity Regulation Act enabling Eskom's restructuring into separate generation, transmission and distribution entities, breaking the monopoly that constrained our energy future. 'Most significantly, the Independent Transmission Project Office is established and will unlock billions in private transmission investment, starting with 1 164 kilometres of new lines that will release 3 200 MW of stranded renewable capacity in the Northern and Western Cape.' ALSO READ: Eskom hammers another nail in load shedding coffin Breathing room now for proper implementation of structural changes Mavuso says with Eskom's availability factor now stabilising around 65% and additional capacity from the Medupi and Koeberg units coming online, we have breathing room to implement structural changes properly and immediate wins are within reach if we can resolve current bottlenecks. However, she points out that current grid access disputes are blocking renewable energy projects and preventing energy traders from participating in virtual wheeling, undermining the very competition government and business are trying to create. In addition, she warns that some exporters face losing EU market access within 12 months due to carbon border adjustments, while we struggle to issue renewable energy certificates quickly enough. Mavuso says the minister's commitment to have the National Energy Regulator of South Africa's board chair lead the resolution of grid access rules offers a concrete near-term milestone that can be tracked. 'The underlying challenge is more fundamental. Municipalities owe Eskom over R110 billion, while customers owe municipalities over R370 billion, a payment crisis that threatens system sustainability. Over 95% of municipalities lack qualified electrical engineers, undermining their ability to collect revenue, maintain infrastructure, or plan for growth. 'Our current distribution system is simply not fit for purpose, and numerous interventions to address the culture of non-payment failed to solve the problem. 'As Minister Ramokgopa explained, Eskom must serve as a supplier of last resort for millions of poor South Africans, but this social obligation requires a sustainable financing model that current structures cannot deliver.' ALSO READ: Third-party concessions a solution for municipal electricity distribution Distribution Agency Agreements will require coordinated effort Mavuso says the Distribution Agency Agreements being developed could address this systematically, but implementation will require the kind of coordinated effort that made the energy partnership successful. She points out that the minister acknowledged the tension between urgency and implementation quality directly, that slow progress risks undermining market sentiment while rushed reforms could trigger system failures. 'His message was clear: government understands the urgency but recognises that getting complex reforms right takes time. It is a difficult balance, but one made easier through the collaborative approach we established.' ALSO READ: 'Sad situation': Eskom warns growing municipal debt seriously risks its sustainability Minister credited business with progress on electricity Mavuso says what gives her confidence is the way this partnership has evolved. 'The minister explicitly credited business as 'very central in the resolution of the energy question' and accepted business' offer to provide embedded skills capacity, from modelling expertise to policy articulation support. 'This is not just consultation but genuine co-creation of solutions where business expertise can help government navigate reform complexity. 'While full transmission system independence may take several years, we can accelerate progress on the immediate priorities of resolving grid access rules, enabling curtailment that could add capacity quickly and developing the municipal engineering capacity that underpins system sustainability. 'These are concrete areas where business skills and government authority can combine for rapid impact. This collaborative model proved successful across government, from home affairs to basic education. As government focuses increasingly on local government delivery, we are ready to contribute capacity and insight where it is most needed.' She says she is optimistic that the momentum can be maintained. 'Minister Ramokgopa's detailed engagement demonstrates how business is now viewed as a genuine partner in solving complex policy challenges. The foundation is solid, the partnership is proven, and the pathway is clear, even if the timeline tests our collective patience.'
