Business

Transnet crisis and load shedding top FirstRand boss’s concerns

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By Ntando Thukwana

Transnet’s logistics struggles and South Africa’s worsening electricity crisis, which is hampering productivity and negatively affecting business, are among the top risks facing South Africa, according to FirstRand CEO Alan Pullinger.

Speaking to Moneyweb in a post-results interview on Thursday, Pullinger said he is less worried about interest rates and inflation, which in the past year shocked many consumers who were already under pressure as the cost of living shot up.

“I think there are a couple of things to keep an eye on; I don’t think interest rates worry me too much; I also don’t think inflation worries me too much.”

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Logistics

The big thing is logistics, he said, adding that operations at the state-owned rail and freight operator need to improve.

“We’ve got to get improvements in Transnet and Spoornet (Transnet Freight Rail). We’ve got to get better metrics in the ports. We’re losing a lot of business at the moment to Maputo because our ports can’t handle the traffic, and for us, that’s money lost to the country. Mozambique is benefitting and now we’re losing.”

ALSO READ: FirstRand group’s top bosses to donate 30% of salaries for three months

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Pullinger was speaking following the release of FirstRand’s interim results for the period through to 31 December 2022. The group had a strong showing in earnings that rose 15% to R18 billion.

He counts waning productivity as a risk to South Africa’s growth and said while the solutions are well known and have been well communicated, the pace of execution is disappointing.

“Looking at the next few years, we are mindful that the commodity tailwind that the South African economy enjoyed should not be extrapolated, and that the need to remove the constraints throttling the country’s productive capacity will become ever more acute,” he said at an earlier investor presentation.

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Electricity crisis

He added that South Africa’s electricity crisis should be closely watched.

“I think we must keep an eye on this load shedding. Whether it’s Stage 5 or Stage 6, there’s still a risk it could get worse,” he said.

“An important risk … remains the underperformance of the energy sector, or alternately a very sharp slowdown in corporate revenues.…

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“Nevertheless, and more encouraging, is that there is a growing expectation that the private sector will need to be deeply involved in rebuilding and expanding the country’s productive capacity.”

ALSO READ: FirstRand keeps its head above water

Added to South Africa’s struggles, he said, are low levels of confidence, impacted by a combination of failing state-owned enterprises, crime and corruption, and low levels of governance and weakening institutional fabric, among other risks.

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“This combination does not foster an environment for business to commit long-term capital …

“After all, investment requires a belief that the future will be better than the present.”

This article originally appeared on Moneyweb and was republished with permission.
Read the original article 
here.

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Published by
By Ntando Thukwana
Read more on these topics: bankState-Owned EnterprisesTransnet