The South African Association of Freight Forwarders (SAAFF) says the R47-billion facility guarantee extended to Transnet, as announced by the government on December 1, is welcome as it may indeed activate the recovery of the State-owned entity and, in due course, aid the positioning of an efficient, fully functional multimodal logistics system soon.   

Finance Minister Enoch Godongwana concurred with Public Enterprises Minister Pravin Gordhan on the issue of a R47-billion guarantee facility, effective immediately, in support of Transnet's recovery plan, including meeting its immediate debt obligations. 

“As a platform for the recovery plan, the facility will go some way to reduce onerous refinancing risks that are otherwise looming, while also helping to address liquidity issues for the SOE in the short to medium term,” SAAFF CEO Dr Juanita Maree says. 

The association says that it expects more details regarding the facility to follow over the next few days, in order to better understand the complete allocation of the guarantees, deployment of capital, future sourcing plans and any conditions that the National Treasury may place on Transnet in the use of the relief provided by the government. 

“The stronger position opens greater dynamics for Transnet in the search for better interest rates among a broader field of potential funding partners in the future, which would potentially serve both maturing debt to be replaced by cheaper loans and indeed in the process of securing funding for the significant capital expenditure that will be required to adequately equip all our ports and the reconstruction of the rail system,” Maree adds. 

The SAAFF says the urgency applied by the government to this decision and the inter-Ministerial alignment by Godongwana and Gordhan are encouraging signs that send messages of both commitment and urgency to the international community, investors, the private sector, the people of South Africa at large, and to every player in the South African economy that the government intends to stabilise and rebuild the transport, logistics, and broader supply chain sectors as a top priority. 

Maree says the Transnet recovery plan is vital to the national economy and will act as a stimulus to ignite broader economic recovery and growth. The current infrastructure crisis and service incapacity at the ports are of material proportion, severely impacting national and international players in the South African economy.   

The announcement of the R47-billion guarantee facility also appears to be in response to calls by international conglomerates for the government to fix the issues or stand to suffer divestment by important companies in the economy that are generators of significant foreign direct investment. Such companies employ thousands of people but demand a stable manufacturing and trading environment as a fundamental requirement for continuation. 

“The world is watching and seeking clear signs of competency and reassurances from the South African government to the nation and the international community. The action of the government in mitigation of risk is not optional right now, but the start with the support to Transnet is imperative at this point,” Maree says. 

The SAAFF posits that this is a good opportunity for South Africa to show that it is a fast-maturing developing economy – by reining in governance issues. 

By applying lessons learned in the way the reconstruction of Transnet is planned, funded, implemented and managed, such action might define and seal the country's reputation and risk profile in global markets, Maree says. 

“We see the action as the start of the building block for a transformed logistics system where the private sector and Transnet will collaborate to the benefit of all in South Africa,” she adds.