Latest news with #BusisiweMavuso
IOL News
2 days ago
- 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
The Citizen
2 days ago
- Business
- The Citizen
S&P Global exposes Transnet's operational crisis as it fails to meet targets
The rating agency's assessment is that Transnet is "entirely dependent on state support" and faces "sizable negative free operating cash flow". S&P Global's downgrading exposes Transnet's operational crisis as reform efforts stall, and it fails to meet its volume targets, burning cash at R13.5 billion per year. This shows how important it is for government to attach strict conditions to future bailouts and accelerate private sector partnerships in ports and rail concessions rather than continuing unconditional support. Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says the decision by S&P Global to downgrade Transnet's credit rating was disappointing news for business in the private sector eager to see the utility performing better. 'This downgrade is not just a reflection of Transnet's financial distress but 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.' She points out that S&P believes Transnet is burning cash without a prospect of turning around its operating performance, and that Transnet Freight Rail will fail to meet its volume targets. 'The business has high fixed costs, major capital expenditure requirements and significant debt. S&P's downgrade reflects its concern that its ability to service that debt is weakening.' Mavuso says that when a company burns through so much cash every year, resulting in negative free cash flow, while its workers receive 6% pay increases at double the inflation rate, we are witnessing a textbook example of unsustainable economics enabled by government guarantees. ALSO READ: Transnet capitulating to unions shows lack of leadership on both sides – BLSA S&P calling out that Transnet is resisting change, moving too slowly 'S&P is calling out what has become clear to many of us: that Transnet is seemingly resisting change and moving too slowly. Compare Transnet to Eskom, which has been able to stabilise its operating performance and is pushing forward deep and fundamental reforms. 'The solution is not more bailouts or government guarantees. It is time for National Treasury to attach strict conditions to any future support, in the form of conditions that enable the private sector competition that Transnet desperately needs. The recent progress in separating rail infrastructure from operations, driven by Operation Vulindlela is a start, but we must move much faster.' Mavuso says private sector partnerships in ports and rail concessions must be accelerated as companies are ready to invest in our logistics infrastructure. However, they need certainty that political interference and Transnet's resistance will not undermine their investments. 'Fixing the logistics crisis is one of the focus points of the business-government partnership. Through the National Logistics Crisis Committee, there has been some progress as ports reduced backlogs and key rail corridors saw some volume improvements, but the fundamental issues remain, and the pace of reform has slowed just when it needs to be accelerating.' ALSO READ: Creecy punts private sector investment for five rail and port corridors Another meeting with government due to slow progress at Transnet She says when business met with a senior government delegation led by President Cyril Ramaphosa in January, there was a strong commitment to accelerating reform to deliver economic growth. 'When the logistics workstreams fell behind on key targets, we met again in May and agreed to a focused three-month sprint to catch up. That sprint needs additional impetus. 'There are critical structural reforms that must be advanced, particularly enabling third-party participation in rail and ports and operationalising the economic regulator that will regulate the logistics system for all. 'Also, as S&P makes clear, there is an urgent need to improve the operational performance of Transnet, from improving security to ensuring the availability of rolling stock, to fixing infrastructure. The plans to do all this through a partnership between the public and private sectors are in place, but either through intransigence or coordination failures, we have not been able to implement them.' Mavuso says the S&P decision should be a wake-up call that Transnet is going in the wrong direction. 'We must act urgently. Transnet cannot continue as if it is business as usual, and President Ramaphosa must act to get the agreed reforms implemented fast.' ALSO READ: Outa welcomes dissolving of RAF board and cancelling of license card tender Business welcomes disbanding board of RAF She also welcomes the decisive action of transport minister Barbara Creecy in disbanding the Road Accident Fund (RAF) board. 'This bold step represents the kind of leadership we desperately need to confront institutional dysfunction head-on. 'The RAF serves a critical function as our safety net against the devastating financial impact of road accidents, yet its track record of mismanagement has become a national embarrassment. With the Special Investigating Unit (SIU) now conducting a broader investigation at the minister's request, we have an opportunity to root out the rot that has spawned endless litigation and operational chaos. 'South Africa deserves an RAF that operates with transparency, maintains clean books and delivers efficient service to those who need it most.' Mavuso would like to see the same no-nonsense approach extended to other state insurance entities that continue to fail South Africans. 'The Unemployment Insurance Fund (UIF) and Compensation Fund have become synonymous with bureaucratic incompetence and public frustration. ALSO READ: Call for intervention in 'horror show' at Compensation Fund and UIF UIF and Compensation Fund need same kind of decisive action 'When Business Unity South Africa called for the UIF to be placed under administration late last year, it was because workers were denied timely access to benefits they had rightfully earned. Similarly, the Compensation Fund's failure to adequately support workers suffering from occupational injuries, illnesses, or workplace fatalities represents a betrayal of our most vulnerable citizens. 'While labour minister Nomakhosazana Meth initiated necessary leadership changes, these institutions remain far from delivering the world-class service standards our people deserve.' She points out that every successful reform sends a powerful signal that we are serious about creating institutions that serve with integrity, efficiency and accountability. 'The private sector stands ready to support this transformation, but government must lead with the courage to make hard decisions and the commitment to see them through. All South Africans depend on getting this right.'
IOL News
6 days ago
- 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
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.'
News24
01-07-2025
- Business
- News24
GNU gets B+ for reforms, but posturing must stop
The GNU delivered some big wins in its first year, but political maturity is needed. South Africans didn't vote for this coalition to watch it tear itself apart over political positioning, writes Busisiwe Mavuso. A year ago, few would have predicted that South Africa's government of national unity would still be standing today, let alone delivering meaningful reforms. Yet here we are – with visa backlogs cleared, private partnerships finally emerging at Transnet and government departments contracting with world-class IT suppliers to advance digitisation. The relationship between business and government under the GNU has been unlike anything we've experienced in recent memory. Through Business for South Africa, we've moved beyond the familiar dance of complaints and promises to genuine collaboration. Quarterly meetings with the president have produced tangible outcomes, not just photo opportunities. The wins have been substantial. The Department of Home Affairs has eliminated the crippling visa backlog that cost us countless tourists and skilled workers. Processing times that once stretched for months now take weeks. Transnet has begun inviting private operators to run port and rail concessions – a breakthrough that seemed impossible just two years ago. Government's IT procurement has been modernised, allowing departments to work with best-in-class suppliers rather than being trapped by outdated tender processes. These aren't small administrative tweaks. They represent fundamental shifts in how government operates, creating the foundation for the digital-first public service that Home Affairs is now pioneering. But let's be honest about where we're falling short. GNU's Achilles heel Eskom's restructuring has hit unexpected delays in key areas, and our logistics corridors still aren't receiving the focused attention they desperately need. Government and business have committed to short-term reform 'sprints' to address these bottlenecks, though the proof will be in execution. More troubling is the broader economic picture. Earlier this year, confidence was building—you could feel it in boardrooms and investment committee meetings. Then the global trade environment shifted dramatically. The looming expiration of the current 10% tariff arrangement on 9 July could see South African exports to the US facing 30% tariffs, fundamentally altering trade flows and forcing rapid strategic adjustments. Business and government have been working overtime to navigate these international headwinds, engaging directly with American counterparts as rules change seemingly overnight. But we require a stable coalition that can help us deliver even more. Which brings us to the GNU's Achilles heel: political uncertainty. The coalition partners haven't established robust protocols for managing their inevitable disagreements without threatening the entire arrangement. The recent tensions have been particularly concerning, with threats of walkouts and the decision to boycott the national dialogue creating exactly the kind of instability that makes investors nervous. It is undermining the capacity to formulate and implement the urgently required policies that address our many challenges, and will undoubtably continue to delay our ambitions for a capable state. This fragility is having real consequences. Business confidence, which had been steadily improving, is now tempered by questions about policy continuity and reform momentum. When political survival takes precedence over governance, everyone loses. The business-government partnership remains energised and focused on accelerating reforms. Operation Vulindlela's second phase – including an ambitious programme to improve local government performance – launches with our full support. The challenges at municipal level are enormous, but business stands ready to contribute expertise and facilitate private investment in critical infrastructure. What we need now is political maturity from the GNU partners. South Africans didn't vote for this coalition to watch it tear itself apart over political positioning. They voted for stability and progress. The economic partnership we've built proves that collaboration works – but it requires a government confident enough in its own longevity to make bold decisions. The GNU's first year report card shows solid B+ performance on structural reforms, but an incomplete grade on political stability. Business will continue doing its part. The question is whether our political leaders will choose partnership over posturing. The next twelve months will determine whether this government becomes a footnote in political history or the foundation for South Africa's economic recovery. Our economic trajectory is our most urgent priority. We must lift growth to the 3%-plus level that we aspired to at the beginning of the year, and political stability is a necessary ingredient. But then we have to knuckle down and change how this economy works, from the network industries to skills development. Organised business is committed to help make bold decisions and implement the changes needed. I hope we continue to be able to partner with a government with similar energy and focus. Busisiwe Mavuso is the CEO Business Leadership South Africa (BLSA).
