25 November 2008
editorial
Johannesburg — ONE can't help wondering whether Maria Ramos is moving to Absa in part to have an easier life. Running one of SA's largest banks may look tough and no doubt it is. But compared with running Transnet, it is probably a picnic.
The politics of parastatals in SA is complex and difficult, more so at Transnet as the government subjects its operations, particularly the ports, to increased regulation. The demands that the government makes of state-owned enterprises such as Transnet, which are supposed to play a key role in the developmental state, tend to make life quite challenging for their CEOs.
Then there are Transnet's operations themselves. Ramos has done a fantastic job of restructuring Transnet and its balance sheet since she took the helm in 2004. She has shed loss-making and noncore assets, has cut gearing levels and turned it from a loss-making drain on the fiscus to a profit-making entity. In addition to returning it to financial health, she has focused Transnet clearly on freight transport and logistics and embarked on an R85bn capital expenditure programme designed to support Transnet's, and SA's, longer-term growth.
But turning around the operations is far harder than fixing the finances, and the jury is still out on how far Ramos has managed to get the trains to run reliably and on time. Some progress has been evident lately, although there's still a long way to go before Transnet can claim to be efficient. Ramos may not be the person to make it one.
The government must find a new CEO who can take that next step in smartening up Transnet's operations.
Meanwhile, this is not a bad time for Ramos to go. With her background in economics and finance, she may be more comfortable as a banker. With Ramos as CEO and Gill Marcus as Absa chairwoman, they should be a formidable force, not only in the bank but in the industry.
Although Absa is not in need of a turnaround, there will be plenty of challenges. Banks everywhere are taking unprecedented strain, and although SA's banks are weathering the global financial crisis well, the South African economy is headed for tough times and this means challenging times for banks too. Absa will need careful stewardship. Also, as the only one of SA's big four banks that's owned by a big international bank, it is, in a sense, closer to the global crisis and that will have to be watched.
Equally, its retail footprint, SA's biggest, makes it highly exposed to consumers' fortunes and that too will need careful steering.
But being the CEO of a top 40 company is as much about the politics of business as it is about the business of business and we will watch with interest what Ramos does in her new role. The banking industry can certainly do with astute political leadership. The financial sector charter has run aground, raising questions about the commitments the banks made to broaden access to finance and provide funding for developmental projects. The election of a new government next year could bring its own challenges as new policy makers make new demands on SA's financial sector. Transnet may be pivotal to the economy but a big bank is hardly less so; nor is dealing with the bureaucracy of a big bank necessarily all that much easier than it is in a parastatal. We wish Ramos the best of luck.
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