The woman who could save South Africa’s economy

Transnet’s new CEO, Michelle Phillips, has years of industry experience that she is looking to leverage to turn the utility around and, in the process, save South Africa’s struggling economy.

In recent years, Transnet has made headlines for all the wrong reasons: mismanagement, corruption, collapsing infrastructure, strike action, and criminal syndicates stealing cables.

These factors have reduced the South African rail, port and pipeline company’s ability to deliver services to the country’s businesses and citizens.

As a result, South African companies have begun to reduce their reliance on the utility by transporting their goods via road rather than railways and using ports outside the country to export their goods.

Transnet’s collapse has gone largely under the radar compared to Eskom. The economic impact of South Africa’s rail and port utility has only been quantified recently, and it is far worse than expected. 

Transnet’s failures are estimated to cost the country R1 billion a day in economic output, equivalent to 4.9% of annual GDP or R353 billion.

This was revealed in a study by the GAIN Group, a boutique consultancy focusing on freight transport contract research.

The Minerals Council of South Africa estimated that poorly run ports and freight-rail lines may have cost the country R150 billion in exports in 2022.

Some argue that it is as significant as Eskom’s impact and could be even worse than the impact of load-shedding.

The utility’s collapse culminated at the end of 2023 when Transnet’s board underwent a massive overhaul.

CEO Portia Derby and CFO Nonkululeko Dlamini resigned in September last year following pressure from business lobby groups, mining companies, and unions.

Derby stepped down at the end of October, while Dlamini left in September. This is when Michelle Phillips entered.

She served as acting CEO from October and became the utility’s official chief executive in February 2024.

The business sector met her appointment with overwhelming positivity. They described her as a problem-solver with a collaborative approach and strong networks – all qualities crucial for navigating Transnet’s path forward.

This optimism seems well-placed, as Phillips and the new board’s efforts have already started to bear fruit.

Transport economist at Stellenbosch University Professor Jan Havenga said Transnet’s new leadership has effectively turned the utility’s fortunes around by being more actively involved in the business and more visible. 

He said rail volumes are improving, and container volumes, particularly at Durban, are picking up. 

While the utility still has a long way to go in its turnaround, Transnet’s future appears brighter with Phillips at its helm.

Michelle Phillips’ path to becoming Transnet CEO

While Phillips has only been Transnet’s permanent CEO for a few months, she brings over two decades of experience within the company to the role.  

Phillips’ career at Transnet has been extensive, encompassing leadership positions in port terminals and pipeline operations. 

She attended Nelson Mandela University between 1989 and 1994, earning a B JURIS LLB degree and majored in company law.

Her career started as a legal representative at the Special Investigating Unity, where she led a forensic investigation team that uncovered and recovered government losses due to corruption in government departments.

However, she has spent most of her career at the utility of which she is now CEO.

Phillips joined Transnet in 2001 and held positions focused on improvement and legal aspects within the Transnet National Ports Authority (TNPA). 

TNPA is responsible for managing and improving South Africa’s port infrastructure.

In 2010, Phillips transitioned to leadership roles within Transnet Port Terminals (TPT), where she was the Executive Head and, in 2014, became the General Manager of Commercial & National Planning.

Her career at Transnet went from strength to strength as she became the CEO of Transnet Pipelines in 2020.

She has been credited with turning around Transnet Pipelines when she served as its CEO, which bodes well for her ability to lead a turnaround at the broader organisation.

In October 2023, Phillips took over as acting Group CEO of Transnet and based on her extensive experience and internal knowledge, she was seen as a strong candidate to lead the turnaround effort as the utility’s permanent CEO.