Latest news with #Mavuso
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.'
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.'
IOL News
30-06-2025
- Business
- IOL News
BLSA CEO warns: US tariffs and GNU challenges threaten South Africa's economy
Business Leadership South Africa CEO Busisiwe Mavuso has warned that South African exports to the United States could soon face tariffs of up to 30% Image: Armand Hough/Independent Media Business Leadership South Africa CEO Busisiwe Mavuso has warned that South African exports to the United States could soon face tariffs of up to 30% if a key trade deal is not renewed. IOL previously reported that last month, US President Donald Trump announced a 10% tariff on all imports to the US, along with additional "reciprocal tariffs" for several countries, including a 30% tariff on South African goods. However, he later paused these higher tariffs for 90 days for most countries, except China. Earlier this year, Minister of Agriculture John Steenhuisen also conceded that the future of South Africa's trade benefits under the African Growth and Opportunity Act (AGOA) remains uncertain, saying the government was 'hoping for the best but preparing for the worst.' Despite President Cyril Ramaphosa's diplomatic efforts, including a high-level meeting with US President Donald Trump, aimed at easing tensions and strengthening trade ties between the two nations. "When we approached the subject of AGOA, it was made very clear that it is a creature of Congress and that we would have to engage with Congress, my personal view is that AGOA may still be on the boil but it is going to be different from the AGOA we know from the past," Steenhuisen said. In her weekly newsletter on Monday, Mavuso warned that the expiry of the current trade arrangement could seriously disrupt the country's export momentum. "Earlier this year, confidence was building—you could feel it in boardrooms and investment committee meetings. Then the global trade environment shifted dramatically," Mavuso said. "The looming expiration of the current 10% tariff arrangement on July 9 could see South African exports to the US facing 30% tariffs, fundamentally altering trade flows and forcing rapid strategic adjustments". Mavuso also pointed to challenges within the Government of National Unity (GNU), noting delays in Eskom's restructuring and the lack of focused attention on key logistics corridors. "Eskom's restructuring has hit unexpected delays in key areas, and our logistics corridors still aren't receiving the focused attention they desperately need" While government and business have committed to short-term reform 'sprints,' Mavuso said success will depend on effective execution. 'The proof will be in execution.' On political dynamics, she described the GNU's political uncertainty as its 'Achilles heel,' warning that tensions among coalition partners risk undermining investor confidence and delaying reforms. 'When political survival takes precedence over governance, everyone loses.' she added. IOL Business Get your news on the go, click here to join the IOL News WhatsApp channel
The Citizen
30-06-2025
- Business
- The Citizen
Business Leadership CEO expresses worry about recent GNU tensions
The DA will not exit the GNU after the president fired one of its deputy ministers, but it has withdrawn from the national dialogue. It is a year since the GNU was formed, and although there were a few times when citizens held their breath when it looked like it would collapse, there were also strong reforms. However, events of the past week and the tensions and threats they caused are worrying, the CEO of Business Leadership says. Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says in her weekly newsletter that the recent tensions are 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 undermines the capacity to formulate and implement the urgently required policies that address our many challenges and will undoubtedly continue to delay our ambitions for a capable state,' she warns. 'This fragility is having real consequences. Business confidence, which was steadily improving, is now tempered by questions about policy continuity and reform momentum. When political survival takes precedence over governance, everyone loses. 'What we need now is political maturity from the GNU partners. South Africans did not vote for this coalition to watch it tear itself apart over political positioning. They voted for stability and progress.' ALSO READ: Mbalula dares DA to 'pack its bags' and leave the GNU [VIDEO] GNU report card shows solid B+, but not for political stability She says 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.' Mavuso says few people would have predicted a year ago that South Africa's government of national unity (GNU) 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 experienced in recent memory. Through Business for South Africa, we moved beyond the familiar dance of complaints and promises to genuine collaboration. Quarterly meetings with the president produced tangible outcomes, not just photo opportunities.' ALSO READ: Leaving GNU would cause 'coalition of chaos', says Steenhuisen as DA escalates pressure Substantial wins of the GNU Mavuso points out that the wins have been substantial. The department of home affairs eliminated the crippling visa backlog that cost us countless tourists and skilled workers. Processing times that once stretched for months now take weeks. 'Transnet started to invite 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.' She emphasises that these are also not 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 are falling short. Eskom's restructuring has hit unexpected delays in key areas, and our logistics corridors still do not receive the focused attention they desperately need.' Mavuso says government and business are committed to short-term reform 'sprints' to address these bottlenecks, although the proof will be in execution. ALSO READ: DA vows to stay in GNU to 'fight corruption', threatens motion against Ramaphosa Broader economic picture much more troubling She points out that the broader economic picture is much more troubling. '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.' Mavuso says this brings us to the GNU's Achilles heel: political uncertainty. 'The coalition partners did not establish robust protocols for managing their inevitable disagreements without threatening the entire arrangement.' However, she points out that 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. The economic partnership we built proves that collaboration works, but it requires a government confident enough in its own longevity to make bold decisions.' ALSO READ: SA's economic growth outlook growing increasingly dim She says 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.'
