Keeping TransNamib on track
… CEO Johny Smith talks milestones, challenges and the future
DESCRIBING TransNamib as a company that has offered him a unique opportunity within the economy, TransNamib Chief Executive Officer Johny Smith (JS) acknowledges that the company is supposed to be one of the biggest public enterprises in the country and hence, the transformation of the company can create a lot of value for Namibia and her people. Confidente News Editor Hilary Mare (HM) last week had an opportunity to have a wide ranging interview with Smith who extended that he has an opportunity to improve the conditions of transportation in Namibia not only to move more freight by rail and improve road safety, but also to eventually provide the future option of passenger rail transportation in the country.
HM: How would you describe the year 2020 so far considering the challenges that have been brought about by Covid-19?
JS: We lost about 50 percent of our revenue during the first few months of our financial year due to the initial lockdown of five weeks. This was a significant blow to our cash flow which had already been a problem at that stage. This distressing situation has created a slower recovery process for the company and put additional pressure on our commitment to our suppliers and maintenance of our rolling stock.
HM: Strategically, what does the future hold for TransNamib?
JS: We are busy with the implementation of our five-year Integrated Strategic Business Plan (ISBP) which focuses on transforming the company into a profitable entity and creating a sustainable company in the medium to long term.
HM: It’s been two years now – you came and made a lot of changes to get TransNamib working again. What have been the challenges in doing this?
JS: There have always been many challenges at TransNamib before I arrived at the company. A particular reference point was the state of corporate governance matters which grossly and negatively affected the overall focus of the company. I have at the time found myself in a situation where there was virtually no sense of ownership on most levels, ill-discipline amongst staff; very little official communication between management and the staff; no focus on business growth; dubious contracts signed; lack of business ethics at board level and other levels of the organisation; 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.
HM: Could you share some of your successes during the time that you have been at the helm?
JS: During the past two years that I have been at TransNamib we have managed to improve some of the matters of administration as well as strategy which have now allowed the company to increase its business operations. Some of the successes are that TransNamib successfully hosted its first Annual General Meeting (AGM) in seven years in February this year. At that 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 unqualified audit in a period of more than 10 years. Furthermore, during the 2018/2019 financial year, TransNamib generated revenue of N$517 million which is an increase of 10.5 percent 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. Apart from this the the railway line between Aus and Lüderitz was opened after 18 years and currently we are moving about 15 000 tons 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 new economic activity in the south in general and especially in Lüderitz.
We have introduced a night train service from Tsumeb to Ondangwa and Oshikango in order to increase freight volumes and improve 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 which were not in the interest of the company and did not create any value for the company were cancelled, a new brand identity and logo for the company was launched in April 2019. This new brand promise is 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 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 reduce the cost of doing business. More than 40 percent of the company’s historical legal matters have been resolved in the past 24 months, thereby saving the company a significant amount of money due to better management.
The road operation which was 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. Our property revenue earnings increased by more than 160 percent over the past 24 months due to improved administration and management of the property portfolio.
Over the past two years we have focused on improving administration and aligning contracts to current market rates to ensure that the interests of the company are protected. A lot of emphasis has also been placed on improving payments from clients and that is how we have managed to increase our return on assets in terms of properties.
In terms of defaulters, we have some clients that did not pay any rent for up to seven years. TransNamib’s properties department has made significant headway in recuperating some of these bad debts and ensuring arrangements are made so that the outstanding payments will be recuperated by the company.
What we are doing at TransNamib is very simple. We are making sure contracts are in the interest of the company, and ensuring that each contract is negotiated based on good market rates that are in line with the quality and location of the property.
Internal traineeship programmes have been reinvigorated to allow the growth of building internal HR capacity at technical levels after these programmes were on hold for more than seven years at the company.
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’s Titans: Building Nations in August 2019.
HM: There have been many allegations against you, some by board members who feel that perhaps you should be replaced. What is your take on these allegations and how have you been addressing them?
JS: Since I have taken on the TransNamib challenge I have been focusing on transforming the company, with very little financial support and still we are improving the operating conditions of the company under very difficult circumstances. There have indeed been various unsubstantiated and anonymous allegations against me and some of my subordinates, making it very difficult to respond to some in a professional manner. I however see these as a positive sign of our transformation at TransNamib.
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. But people with hidden agendas will always try and find excuses to create smokescreens for their own benefit. My management is more than awake to their negative tactics and will not be deterred by their actions. Since I came 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.
HM: The nexus between the board and the executive is essential for a progressive public enterprise. How would you describe your relationship with the board?
JS: It has taken me two years to get a substantive executive team in place at the company to support the growth and development of the company through the implementation of its business plan. It is therefore important that the board remains with its strategic role and guidance while the executive team focuses on the implementation of the company’s business plan. The management and operations of the company on a daily basis must be fully implemented by the executive team to ensure that the various strategies are implemented to enhance the company’s business and financial position.
HM: A huge amount of money is required to rehabilitate the railway network. In the absence of such investment, will TransNamib remain viable in the future?
JS: The rehabilitation of the network is the responsibility of the Government of Namibia through the Ministry of Works and Transport. Significant funds have been spent on the railway network upgrades in the past few years, albeit not sufficient. The main project currently, is the upgrade of the line between Walvis Bay and Kranzberg. Despite these investments being at a lower level than required, TransNamib still has the opportunity to grow its freight volumes as the biggest part of the rail network in the country is at an average to good condition. The biggest challenge for TransNamib is the limited capacity of its rolling stock with 80 percent of its locomotive fleet being more than 50 years old and therefore very unreliable.