Turnarounds at Eskom and Transnet not yet showing in GDP figures

The B4SA Business Government Partnership, a collaboration between business and government, has made some impressive strides in reversing the slide at Eskom and Transnet, but there’s no sign of this yet in SA’s GDP figures.

At a progress update briefing on Thursday, Discovery CEO and B4SA steering committee member Adrian Gore pointed to economic models showing a growth rate of 3% or higher will uplift 10 million people by 2030.

That’s still a long way from the current sub-1% growth contributing feverishly to unemployment of 33% and – more worryingly – youth unemployment above 62% for the 15-24 age group.

One interesting revelation during the press briefing was that the partnership is considering adding Joburg to its existing four priority work streams – namely energy; transport and logistics; crime and corruption; and youth employment.

The decay in Africa’s most industrialised city moved President Cyril Ramaphosa to bemoan the decline in the state of services and infrastructure, with host city Joburg, coming under international scrutiny leading up to the G20 meeting later this year.

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B4SA says it is in the process of gathering data on the problems facing Joburg before adding this to its workload.

On the energy front, structural load shedding has reduced by 98% since the partnership was launched in 2023, with 6GW of new energy generation added – and an equivalent amount added through solar power installations.

The number of unplanned breakdowns at Eskom is now back to 2017 levels, with an energy availability factor of 62%.

Transnet Freight Rail (TRF) missed its volume targets for the last financial year, but still shows 7.4% growth to 160 million tonnes (Mt) for the year. B4SA forecasts 171Mt for the 2026 financial year, while transport Minister Barbara Creecy has set a bold target of 250Mt by 2030 – surpassing the 226Mt achieved in 2018.

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“Structural load shedding is all but over,” said Simon Baloyi, Sasol CEO and a sponsor of the energy work stream for the B4SA Business Government Partnership. Among the areas of reform needed to build on the success of the last two years are:

• Accelerating grid capacity, which requires sustained investment in generation and 14 000kms of transmission lines by 2040;
• Finalising and publishing the SA Wholesale Electricity Market (Sawem) roadmap, replacing the Eskom monopoly with a one open to private sector competition;
• Expediting the licensing of the market operator by the National Energy Regulator of SA’s (Nersa) and approve the Sawem market codes;
• Fast-tracking the development of Eskom vesting contracts to prepare for the launch of competition. Vesting contracts are needed to transfer Eskom’s rights, obligations and revenues to new market operators;
• Finalising system-wide tariff reform to bring an end to Eskom’s monopoly pricing and cross-subsidisation of services.

The partnership has set a target of R1.3 trillion in new generation investment by 2035.

Earlier this year, Nersa approved a national wheeling Retail Tariff Plan, allowing for energy to be sold by a third-party producer across Eskom lines to an end-user elsewhere in the country. Another sign of progress were the 14 electricity trading licences already issued, allowing private participation in the energy sector.

Baloyi noted this was a major shift from the situation in 2023 when there was no legal basis for a competitive energy market in SA.

ALSO READ: Creecy punts private sector investment for five rail and port corridors

Better turnaround times at ports

Andrew Kirby, chair of Toyota SA and one of the sponsors for the transport and logistics work stream, also had some good news to share.

He said ship discharge and delivery times had reduced from 21 days in mid-2023 to just two days; border queues had reduced from an average 19kms in 2023 to just three kilometres by June 2025; and the number of trucks processed at borders has gone up from about 500 a day in 2023 to 1 700 in 2025.

TRF tonnages may have started up-trending, but they’re nowhere near where they need to be. The Auditor-General SA noted that Transnet missed more than 60% of its recovery milestones, and growth is still below target.

The Northern Corridor reported a more than 40% reduction in train cancellations over the prior year, although the key Central Corridor is still experiencing crippling incidents, said Kirby.

Transnet is awaiting ministerial signoff on the conditionalities attached to the additional R150 billion in guarantees from National Treasury, most of which will be used to service debt. Eleven train operating companies have been given conditional access to Transnet’s rail network starting in 2026. They will operate across 41 routes on six major corridors, aiming to add 20Mt of freight annually to help Minister Creecy meet the 250Mt target.

ALSO READ: Load reduction is coming to an end, says minister

Crime

On crime and corruption, Neal Froneman, outgoing CEO of Sibanye-Stillwater, noted that all 40 of the recommendations made by the Financial Action Task Force [FATF] to get SA removed from its grey list have now been met. SA’s removal from the list is expected before year end.

More than 500 officials from the Directorate for Priority Crime Investigation [DPCI] have been trained in forensics, digital investigations, and other disciplines since the launch of the partnership.

A Digital Evidence Unit has now been established and is fully operational, allowing digital devices to be analysed locally rather than abroad. This speeds up investigations and prosecutions.

ALSO READ: Eskom forges ahead in bid to end load shedding for good

Youth employment de-couples from GDP

It is concerning that there has been a de-coupling of youth employment from GDP growth, said Khulekani Mathe, CEO of Business Unity SA [Busa] and a B4SA steering committee member.

One major triumph of the past year was the introduction of Electronic Travel Authorisation visas by Tourism Minister Leon Schreiber, which could allow for one million more visitors a year, creating 70 000 jobs, mostly among the youth.

Yes4Youth now has more than 1 800 corporate partners and has created more than 200 000 work experience roles. Some R50 million has been allocated to co-fund on-the-job digital skills training, while R3.3 billion in new funds opened new opportunities for small businesses, which are a primary engine of job creation in SA.

B4SA protested the removal of amendment regulations under the National Credit Act that would have improved access to funding for SMEs. This followed public outcry, much of which from students fearing adverse credit data being reported to credit bureaus. The Department of Trade, Industry and Competition [dtic] is reportedly looking at reintroducing regulations that would benefit SMEs.

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When is the growth coming?

For all the good news, where is the economic growth? That, after all, is the overriding goal of the partnership.

“Growth is a lagging indicator,” says B4SA, and will inevitably follow the trillions to be invested in infrastructure over the coming years, provided the four priority areas identified by the partnership are addressed.

ALSO READ: Business partnership with government shows results – BLSA

End state for Eskom and Transnet

B4SA envisages an “end state” for Eskom and Transnet.

For Eskom, this means a functioning, efficient energy market, said Baloyi. “This won’t mean privatising everything. We have to [have a] balance of private sector and Eskom.”

For Transnet, it means separating out who owns, manages and operates what infrastructure currently under Transnet’s domain. It also means operational improvements in ports and rail, with Transnet competing with private operators.

This article was republished from Moneyweb. Read the original here.