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On The Spot - TransNamib turnaround will not be derailed

2021-06-11  Kuzeeko Tjitemisa

On The Spot - TransNamib turnaround will not be derailed

TransNamib chief executive officer (​CEO) Johny Smith sits down with New Era’s Kuzeeko Tjitemisa to
shed more light on the embattled rail transporter’s triumphs and struggles. 


KT: Your five-year contract at TransNamib (TN) will come to an end at the beginning of 2023. What will you highlight as your achievements? And what have been the challenges?

During the past three years that I have
been at TransNamib, we have managed to improve some of the matters of administration as well as strategy, which has now allowed the company to increase its business operations. Some of the successes during the past two years include TransNamib successfully hosting its first annual general meeting (AGM) in seven years in February 2020, and its second consecutive AGM in 2021.

At the 2020 AGM, the company
presented five audited financials, which were all approved by the shareholder, and thus made TransNamib current and up to date with all financials, which had been a major problem in the past.

For the 2018/19 financials, TransNamib presented its shareholder with the first and unqualified audit in a period of more than 10 years.

During the 2018/2019 financial year, TransNamib generated revenue of N$517 million, which is an increase of 10.5% in revenue, year-on-year. Despite the challenge of rolling stock, TransNamib managed to attain its highest percentage increase in revenue in over a decade.

The railway line between Aus and
Lüderitz was opened after 18 years, and we are currently moving about 15 000 tonnes of manganese per month between Ariamsvlei and Lüderitz. Through this initiative, we have appointed about 150 new staff members in southern Namibia to support this project, which in turn has equally stimulated and created new economic activity in the south in general, and especially in Lüderitz. This route has become a major revenue-generating source for TransNamib, and we are in the process of upscaling the tonnage of manganese moved to 30 000 tonnes per month.

We have introduced a night train service from Tsumeb to Ondangwa and Oshikango
in order to increase freight volumes and improve the efficiency of our rolling stock, as the train service has only been operational during the day since inception of the service in 2011.

TransNamib Holdings Ltd and Botswana Railways (BR) signed a memorandum of understanding (MoU), which will culminate in the development and operation of a container terminal in Gobabis. 

Furthermore, this MoU serves as a short to medium-term partnership to connect the two rail companies via a rail and road intermodal service between Namibia and Botswana. The intermodal linkage from Walvis Bay to Gobabis will, therefore, reduce the road transportation return trip with about 1 200 km.

A number of long-term agreements were cancelled which were not in the interest of
the company and did not create any value for the company. They were cancelled as they did not create any value for the company.

A new brand identity and logo for the company was launched in April 2019. This new brand promise forms part of building
our future and a growth story that is creating value for its shareholder, economy and country.

A performance management system has been introduced at the executive level of the company, and we are busy implementing it at other levels of the organisation to improve efficiency and organisational effectiveness.

We have managed to reduce overall costs at the company by focusing on streamlining our business processes, and reducing the cost of doing business. More than 40% of the company’s historical legal legacy matters have been resolved in the past 36 months, thereby saving the company a significant amount of money due to better management.

We have introduced specific road to rail strategies for some of our customers to optimise space at our stations to use it as a distribution point for the local market. The result of this project has seen more than 150 road trucks moving off the roads by customers simply using our services.

The road operations which were a loss-making business unit for more than 10 years, was closed down in July 2019 to allow us to focus on our core business of moving freight by rail. The continuous focus on combining warehousing and property leasing space at stations has increased value for our freight customers.

Our property revenue earnings have increased by more than 160% in the first 24 months of my tenure due to improved administration and management of the property portfolio.

Internal traineeship programs have been reinvigorated to allow the growth of building internal HR capacity at technical levels after these programs were on hold for more than seven years at the company.

There has been a general increase in confidence in our services from the various stakeholders of the company, which includes the shareholder, clients and suppliers.

As the Chief Executive Officer of TransNamib, I was named the Lifetime Achiever for 2019/20 at the Pan African Awards in the sector of CEO Global’sGlobalX’s Titans: Building Nations in August 2019.

We have introduced a training programme, whereby we have identified unemployed youth to go through a period of training to become train drivers, thus contributing to equipping the Namibian youth with skills and providing unemployed Namibians with an opportunity to gain employment.

There have always been many challenges at TransNamib before I arrived at the

company, a particular reference to corporate governance matters which grossly and negatively affected the overall focus of the company.

At the time of my arrival, I found myself in a situation where there was virtually no sense of ownership on most levels, no accountability at various levels of the company; ill-discipline amongst staff; very little no official communication between management and the staff; no focus on business growth; dubious contracts signed; lack of business ethics at different levels of the organization, etc.

It has, therefore, been a major challenge to resolve some of these legacy issues as the impact has been intrinsic to the organisation and had become part of the culture of the organisation.

Covid-19 has of course also brought its
own challenges. Due to the initial lockdown of five weeks earlier this year, we lost about
50% of our revenue during the first few months of our financial year. This added a significant blow to our cash flow, which had already been a problem at that stage. This distressing situation created a slower recovery process for the company, and has put additional pressure on our commitment to our suppliers and ensuring the ongoing maintenance of our rolling stock.


Does TransNamib receive adequate
funding from government? Also, how much has TransNamib received from government for the last two financial years, and how does this compare to the organisation’s operational needs?

We are aware of the difficult situation our entire country is facing in terms of the downturn of the global economy -
the situation in Namibia and the one TransNamib is facing are not unique - but we are doing all we can with the resources we have, and our shareholder is well-aware
of the challenges we face as a company.


TransNamib staff, including some board members, have in the past faced corruption charges, How will you describe the level of corruption/maladministration at the entity now? Or what is your leadership doing to reduce or eradicate corruption that seems to be rampant at the organisation?

Since the start of my tenure at TransNamib, I have made it clear that we will operate above board, and in line with the laws and policies of the company. At TransNamib, there is no room for doing things the wrong way. We have created open platforms for communication at the company for all employees, and together with our policies, it allows for a transparent process to address any matters of concern.

Since I have come on board at TransNamib, I have been focusing on doing things the right way, and at the same time also trying to resolve matters of the past, only in the best interest of the company.


How much does TransNamib need to purchase new locomotives, and how does this figure compare to maintaining the ageing fleet?

We currently are in the process of addressing the problem of our ageing fleet.
The procurement process for the remanufacturing of the 33 locomotives has also commenced, and is currently with the Central Procurement Board of Namibia. Once these 33 locomotives have been refurbished, it will make a significant difference to our operations and our ability to generate revenue.


What capital injection does TransNamib require for its business strategy?

In terms of our Integrated Strategic Business Plan (ISBP), we need a capital injection of about N$2 billion.


How long do you estimate it will take TransNamib to break even, provided the necessary investments in infrastructure are made?

In terms of our ISBP, we need to break even by 2023, and we are focusing all our resources towards realising that goal. We are committed to transforming TransNamib.


How will you describe the current
financial status of the entity?

We have been quite open in terms of sharing our problems with our cash flows, but we are still pushing forward and using our limited resources to push the company forward.


A private entity has shown interest in developing a passenger rail service between Rehoboth and Windhoek to reduce the traffic of daily commuters on the B1. What is the delay in establishing this service?

We are in the process of relooking our passenger services, but it needs to be understood that in terms of our revenue generation, freight is our revenue generator. During this period, we need to focus on the freight business so that we can generate income to purchase new rolling stock and do the required maintenance so that we can provide a reliable passenger service.


TransNamib recently experienced major accidents. What is causing the accidents? Do you suspect any sabotage from staff, as we understand that staff morale is low and they don’t care about the organisation anymore because of your poor leadership? How much are the losses for recent major accidents? What measures are being employed by your safety and operations departments to manage the situation?

It would be premature to speculate on the causes of these incidents while they are still under investigation. We will have more clarity once the investigations have been concluded.


What is your comment on the allegation that you have been misleading the board regarding the performance of TN, and that there is material misrepresentation between strategic plan achievements vs actuals?

Our financial performance is indicated in our annual reports, which are verified by external auditors. For the past two years, we have received an unqualified audit, which should indicate our transparency and honesty in terms of the information given regarding our performance.


Is it true that you have employed Coloureds/Basters in most strategic positions during your tenure? 

Our recruitment process is done in a transparent and fair manner. Once a need has been identified in terms of human
capital, the recruitment takes place - upon which the highest-scoring candidate is selected for the position.

2021-06-11  Kuzeeko Tjitemisa

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