{"id":848225,"date":"2026-01-21T17:00:00","date_gmt":"2026-01-21T15:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=848225"},"modified":"2026-01-21T14:21:35","modified_gmt":"2026-01-21T12:21:35","slug":"one-of-south-africas-world-class-state-companies-went-from-hero-to-zero","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/848225\/one-of-south-africas-world-class-state-companies-went-from-hero-to-zero\/","title":{"rendered":"One of South Africa’s world-class state companies went from hero to zero"},"content":{"rendered":"\n

Fifteen years ago, Transnet was widely regarded as one of South Africa\u2019s strongest state-owned enterprises.<\/p>\n\n\n\n

Today, it stands as a symbol of institutional decay, ballooning debt, and a logistics system under severe strain.<\/p>\n\n\n\n

This is according to Olga Constantatos, head of credit at Futuregrowth Asset Management, who noted that the crisis didn’t happen overnight and was preventable.<\/p>\n\n\n\n

\u201cIt was a long time in the making. At the core of it really was a leadership crisis, which destroyed execution capability over time,\u201d Constantatos said.<\/p>\n\n\n\n

She explained in an interview <\/strong><\/a>that governance failures during the years of state capture fundamentally altered how Transnet functioned.<\/p>\n\n\n\n

This included shareholder ministries and boards making decisions that were not necessarily in the best interests of the company and its stakeholders.<\/p>\n\n\n\n

Constantatos said those decisions led to massive capital overspending and inappropriate procurement, which, in turn, drove debt sharply higher. <\/p>\n\n\n\n

She added that the credit metrics tell the story. They show massive amounts of fruitless and wasteful expenditure, ballooning debt, and qualified audit reports.<\/p>\n\n\n\n

This ultimately led to credit ratings downgrades that pushed Transnet into junk status.<\/p>\n\n\n\n

What had once been a world-class entity that was able to fund itself independently became reliant on nearly R200 billion in government guarantees just to remain solvent.<\/p>\n\n\n\n

Constantatos explained that Transnet has been in decline for over a decade. She added that from an investment perspective, governance failures are never abstract. <\/p>\n\n\n\n

\u201cThey sound airy-fairy, but they do result in financial impacts that you see in the numbers\u2014weakened credit metrics, lower cash flows, higher debt,\u201d she said. <\/p>\n\n\n\n

\u201cThe actions at the top really do have consequences further down the line.\u201d<\/p>\n\n\n\n

While government guarantees have kept Transnet afloat, Constantatos is clear that they have not fixed its underlying capital structure.<\/p>\n\n\n\n

\u201cWhat the guarantees have done is enable them to refinance maturing debt and keep operations going,\u201d she said.<\/p>\n\n\n\n

The problem is that the debt accumulated during the state capture years never generated the additional cash flows that should have followed. <\/p>\n\n\n\n

She explained that rail volumes crashed, and so the debt hasn\u2019t fixed the underlying operational issues, leaving Transnet dependent on the state to roll over its borrowings.<\/p>\n\n\n\n

There is hope <\/h2>\n\n\n
\n
\"\"<\/a>
Olga Constantatos, head of credit at Futuregrowth Asset Management<\/em><\/figcaption><\/figure><\/div>\n\n\n

That said, Constantatos acknowledged that recent reforms are beginning to show early promise.<\/p>\n\n\n\n

Initiatives such as Operation Vulindlela and the National Logistics Crisis Committee have, in her view, provided real political cover and impetus for reforms that have been long needed and long discussed.<\/p>\n\n\n\n

She believes the structural separation of infrastructure and operations is directionally correct.<\/p>\n\n\n\n

\u201cSplitting infrastructure monopolies from competitive operations is how global reform in the transport sector has happened.\u201d However, she warned that execution and regulation will determine success. <\/p>\n\n\n\n

\u201cThe devil is very much in the details. While there are small green shoots and forward momentum, the system has been very much decimated and is clawing its way back slowly.\u201d <\/p>\n\n\n\n

She also argued that maintaining reform momentum from the presidency and related structures is essential.<\/p>\n\n\n\n

One area of concern is how private sector access to rail and ports is being implemented. Constantatos highlighted an inherent conflict in the current model, where Transnet is both infrastructure owner and gatekeeper.<\/p>\n\n\n\n

\u201cTransnet is effectively being asked to be a referee and a player in the same game,\u201d she said.<\/p>\n\n\n\n

By controlling access, setting terms, and adjudicating bids from future competitors, Transnet is placed in a position that \u201cdoes introduce some conflicts that do need to be managed.\u201d<\/p>\n\n\n\n

Even where progress is evident\u2014such as the allocation of 41 private rail slots\u2014Constantatos warned against unrealistic expectations.<\/p>\n\n\n\n

She stressed that it will take time, but noted that private-sector participation is vital to clearing what she described as \u201ca big economic bottleneck\u201d that has constrained growth.<\/p>\n\n\n\n

Looking ahead, Constantatos said there are three conditions that must be met before Transnet becomes truly bankable again.<\/p>\n\n\n\n

\u201cThe first would be independent regulation to prevent the monopoly status quo from continuing,\u201d she said.<\/p>\n\n\n\n

The second is \u201cclear signs of operational capability,\u201d and the third is \u201cgenuine risk allocation\u201d so that each party bears the risks it controls. <\/p>\n\n\n\n

Ultimately, Constantatos said progress will be measured not by policy announcements but by outcomes. \u201cTons shipped, tons moved, tons railed\u2014that\u2019s what we really care about.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Fifteen years ago, Transnet was widely regarded as one of South Africa\u2019s strongest state-owned enterprises.<\/p>\n","protected":false},"author":92,"featured_media":795064,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[11591,853,2138],"class_list":["post-848225","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-futuregrowth-asset-management","tag-south-africa","tag-transnet"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848225","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=848225"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848225\/revisions"}],"predecessor-version":[{"id":848487,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848225\/revisions\/848487"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/795064"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=848225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=848225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=848225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}