FNB Wealth and Investments’ Wayne McCurrie said Transnet is a bigger catastrophe than Eskom and is causing severe economic damage.
Speaking to Business Day TV, McCurrie said most South Africans do not realise the extent of the disaster because it does not touch them personally, like Eskom’s load-shedding.
“The average South African don’t realise what a complete and utter catastrophe Transnet is. It is way worse than Eskom,” he said.
McCurrie’s comments align with Krutham managing director Peter Attard Montalto, who also said the crisis at Transnet is more complex than that at Eskom.
Attard Montalto explained that Transnet has quasi-regulatory functions on top of its deteriorating rail and port infrastructure.
Transnet’s finances are in such a mess that it asked the National Treasury to take on R61 billion of its debt.
Attard Montalto said it is not a surprise, as Transnet had already been breaching loan covenants with banks at the beginning of the year.
He said that the Treasury has little choice but to come through in some form and provide support for Transnet.
“If you did not do these bailouts, they would come back to bite you ten times worse later regarding defaults and investors pulling out of the country.”
The problems at Transnet have severe economic consequences for the South African economy as it impacts many of the largest sectors.
Stanlib chief economist Kevin Lings said it placed 68% of the country’s GDP at risk as companies increasingly cannot import and export goods.
South Africa’s imports and exports combined comprise 68% of the country’s GDP, effectively meaning that R3.1 trillion of R4.6 trillion of GDP depends on Transnet.
Imports are particularly important as the output of South Africa’s productive sectors, such as mining and manufacturing, have been flat over the past 20 years while retail spending has grown massively.
A study by the GAIN Group confirmed the concerns, showing that Transnet’s collapse costs the country R1 billion a day in economic output.
While there are many plans to resolve Transnet’s problems, the issues mentioned by Attard Montalto and Lings remain.
Earlier this month, shipping and logistics giant Maersk said that congestion at South African ports forced it to make an alternative plan.
It created “Cape Town Express” – a new feeder service connected to the updated SAFARI service.
“South Africa, which is facing congestion, will get connected on a dedicated feeder service via Port Louis to improve reliability and transit time,” it said.
Cape Town’s harbour will be delinked from Maersk’s Far East-West Africa service, which shows the extent of deterioration at local posts.
The new Cape Town Express service caters for consistent cargo movement between Port Louis and Cape Town. In Port Louis, there will be connectivity from and to Asia using the Safari service.
Simply put, local harbours are so poor that Maersk will start to use Port Louis in Mauritius instead. From there, smaller shipments will be moved to Cape Town.