Business Maverick

AFTER THE BELL

After Prasa’s dramatic derailment, is it possible to get back on track?

After Prasa’s dramatic derailment, is it possible to get back on track?
The southern train line in Parrow on 15 March 2022 in Cape Town, South Africa. (Photo: Gallo Images / ER Lombard)

The new Prasa board is trying heroically to put the jigsaw puzzle back together, and passenger trains are beginning to appear again after the Covid shutdown. Does an organisation slowly improve, and you don’t really notice it, and then it suddenly it bounces back? I’m sceptical.

Not long after World War 2, the Japanese government took a huge bet on rail. It was controversial at the time because the world was moving towards road and air transport at a rapid pace. The rail network in Japan, as in South Africa, was generally narrow gauge, so building a new high-speed network would require a start-from-scratch approach.

The bet was based on physics. Rail transport, when implemented correctly, is more efficient in respect of both energy and time than road or air travel. But the capital cost of the construction exercise is, of course, far higher than road transport, particularly since the major capital item in the latter is borne on the balance sheet of the traveller.

Nevertheless, in the economic boom that followed Japan’s reconstruction, the head of the Japanese railways, Shinji Sogō, was convinced that a high-speed rail system would work and managed to convince politicians that it was worth a try. In 1959, construction began between Tokyo and Osaka, and the Shinkansen was born. The estimated cost was 200-billion yen, but when the line was completed four years later, the true cost ended up being double that. Sogō resigned.

But the line was a fabulous success. In 2017, it carried 159 million passengers. The distance between Tokyo and Osaka is about 500km, and the train takes about three hours, with one leaving every half an hour. The train has carried about six billion passengers over the past five decades. The network has expanded dramatically and the trains have got faster. The success of Shinkansen inspired high-speed trains all over the world. And obviously, the trains leave on time. A few years ago, the rail service took out national advertisements to apologise when one of the trains left 20 seconds early.

If it is not too depressing, let us now change our focus to South Africa’s Passenger Rail Agency of South Africa (Prasa). It’s an unfair comparison. It’s like comparing a Fiat Uno with a Ferrari, and that comparison does a disservice to the Fiat Uno.

And yet, is it so unfair? South Africa started building railways in 1859 and never stopped. SA has a rail network of 36,000km. That’s actually larger than the rail network in Japan. The big failure in SA has been — you guessed it — management. We kinda know the story. In 2012, Prasa paid a company called Swifambo Rail Leasing R3.5-billion to deliver locomotives, which it did, but sadly they were too tall and didn’t fit under SA bridges. Years later, Swifambo’s director, Auswell Mashaba, admitted to the Zondo Commission that he paid the ANC R80-million.


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And here, ladies and gentlemen, is the level of gobsmacking incompetence: the ANC never got the money because the person to whom Mashaba gave the money decided to keep it. What can you say? It’s sad when there is no honour left among thieves. The degree of involvement in the corrupt deal was enormous: 44 people have been implicated, but only 11 have resigned or been fired.

Clearly, the organisation was imploding from the inside for more than a decade. But yet, from the outside, it seemed to be holding up. James Stent from the news service GroundUp has done an excellent piece, showing 12 graphs which track Prasa’s decline.

From 2008 to 2014, Prasa’s fare revenue was still increasing every year. And then it dipped slightly downwards and has now completely crashed, helped along by Covid. In 2008, Prasa collected R1.2-billion in fares, last year it collected R178-million.

How did this happen? An old mate of mine, Chris Hock, told me a story just this week about a business school exercise he attended with a group of about 20 execs. They sat in a circle in the bushveld, where everyone was given a drum. A long-haired dude led the group in drumming patterns until everyone was in the mood and feeling creatively musical. And then the dude said: watch what happens when I remove the bass beat — and he stopped drumming.

Three profound lessons emerged, Chris says. At first, there was no discernible change in the happy, jazzy beat. Second, the music went on as normal for much longer than you’d think possible. And third, when it finally did break down, it broke down very quickly. This is a version of Ernest Hemingway’s famous characterisation of going bankrupt. “How did you go bankrupt?” one of his characters is asked. “Two ways: Gradually, then suddenly.”

What intrigues me is whether this works in reverse. The new Prasa board is trying heroically to put the jigsaw puzzle back together, and passenger trains are beginning to appear again after the Covid shutdown. Does an organisation slowly improve, and you don’t really notice it, and then it suddenly it bounces back?

I’m sceptical. The Prasa board includes a whole bunch of new faces, but none outwardly has any obvious knowledge or love for train transport, although the new acting CEO, Hishaam Emeran, has been with the organisation for years and was in charge of technical operations.

Meanwhile, the taxi industry is eating Prasa’s lunch, just as the transport industry is white-anting Transnet’s income. And just for the record, not a single train operates on 35% of SA’s tracks. DM/BM

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  • Nic SA says:

    The biggest problem is the quality of regular employees. Of course management level corruption and competence is an important issue, but what really destroys South African SOEs is the generalized incompetence and poor training of their greater employee base because there is inadequate training, poor middle-management, and zero accountability for incompetent employees.

    Japanese and European railways, and formerly SA railways, functioned so effectively because they nurture their employees, hold them accountable and inculcate a certain level of pride and sense of responsibility in employment. In current South Africa, government employment is seen as something that is deserved not earned, with no real sense of meritocracy or reward for skill and hard work.

    In fact this is often actively punished because competent employees are seen as threatening to poorly trained and incompetent management who often have little knowledge or understanding of the companies they are supposedly managing.

    This organizational culture is ruinous to an organization that depends on precision, punctuality and well trained employees and unfortunately is part of the ANC’s DNA so will not change substantially until there is a change in government (hopefully in 2024).

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