Jeanette Diergaardt
The Ministry of Finance has cut N$100 million from TransNamib Holdings Ltd’s 2025/26 budget, leaving the state-owned railway with just N$220 million to tackle day-to-day operations and infrastructure upgrades.
In a letter dated 20 October to TransNamib, seen by Namibia Business Review, the then Ministry of Finance executive director Michael Humavindu, said the reduction was necessary due to prevailing fiscal constraints and a downward revision of the national revenue outlook.
“It has become necessary for the government to implement targeted expenditure containment measures across all sectors, including State-Owned Enterprises,” Humavindu wrote.
He urged the railway company to “prudently manage its operations within the reduced allocation and realign activities to the available resources and assured the company of continued cooperation to safeguard financial sustainability and effective service delivery.”
Despite the budget allocation, TransNamib continues to face a raft of operational challenges. The company suffers from a shortage of locomotives, aging and substandard rail infrastructure, and a business model that has yet to achieve profitability. A significant portion of the national railway network is inactive, with 69.328 km of tracks between Otjiwarongo and Outjo currently non-operational, limiting its ability to move cargo efficiently.
The rail transport company made cumulative losses of N$1.44 billion between 2019 and 2023, with the 2022/23 loss alone at N$478 million. Two top executives, Webster Gonzo (Human Capital) and Allynsia Platt (Executive), were suspended last week following an Ernst and Young forensic investigation that revealed irregularities in property management and disposal. “Disciplinary hearings are to follow,” the company said.
TransNamib’s total property value declined from N$2.6 billion to N$2.3 billion over one year due to depreciation and alienation of certain assets. While revenue grew by 14% to N$535 million, net profit dropped sharply by N$547 million, highlighting deep operational and financial inefficiencies. The then CEO, John Smit, attributed the decline to substantial penalties incurred during the period.
The Ministry of Works and Transport says TransNamib still faces multiple challenges, including an outdated railway system and a shortage of operational locomotives.
“The national railway network within the country has a total length of 2 687 km, of which 2 617.62 km is still active except the 69.328 km Otjiwarongo–Outjo line that is not operational,” ministry of works and transport executive director Jonas Sheelongo told Namibia Business Review.
Parts of the railway system are being upgraded to meet Southern African Development Community (SADC) standards. Upgrades have included the 225-km stretch from Kranzberg to Walvis Bay and the 224-km section between Kranzberg and Otjiwarongo, which began last year.
Sheelongo said: “TransNamib, as a railway operator fully owned by the state, requires full capacitation in terms of equipment and rolling stock. Similarly, there is a need to eliminate inefficiencies within its operations supply chain.”
Furthermore, Sheelongo said it is critical to ensure that certain economic routes within the network are fully upgraded and well-maintained so that the company can move cargo on routes without hindrance
“TransNamib as an entity also needs to aggressively promote its offerings in the market. Improved rolling stock and railway infrastructure result in a safe and efficient service delivery, which indeed will help to grow TransNamib’s market share, thus improving its competitiveness.”
The government continues to assist TransNamib in operating sustainably. The government provided guarantees to the recent N$2.6 billion loan agreement that was signed between TransNamib, Development Bank of Southern Africa, and Development Bank of Namibia.
“Part of these funds will be utilised to purchase new rolling stock and re-manufacture old locomotives and wagons. The remanufacturing is being done locally, while new locomotives will be purchased from various manufacturers,” Sheelongo said.
TransNamib admits that the suspension of the N$100 million will put severe financial pressure on the company from an operational perspective, but will not have any direct and immediate impact on infrastructure upgrades or the locomotive remanufacturing project.
Plans to acquire 23 electric and diesel locomotives for N$2.5 billion remain on hold after works and transport minister Veiko Nekundi cancelled the tender due to concerns about direct procurement from a single supplier.
Questions remain whether the country’s decades-old railway lines can accommodate the new fleet.
TransNamib executive for marketing and commercial, Kendall Swartz, said the company has commissioned an independent rail expert to review best practices. “The study will make recommendations, which will give TransNamib deeper insights into the strategy that they can take going forward for the remake and/or procurement of the locomotives,” he said.
A rail expert told Namibia Business Review that the company needs more operational locomotives to move freight and achieve profitability. “With the government subsidies they are getting, it can, however, cause the state-owned enterprise to become more relaxed about reaching profitability. The company has received substantial government bailouts to resuscitate operations.
TransNamib received a budget allocation of N$300 million for 2024/25, with N$320 million earmarked for day-to-day operations and rolling stock challenges. In January, the company announced plans to spend N$211 million rebuilding seven locomotives.
Corporate governance expert Ntelamo Ntelamo said TransNamib must demonstrate value to the economy and push for efficiency. “TransNamib may argue that it is critical for the economy; however, if that comes at a burden to the taxpayer, then it is useless and can be replaced by the private sector. When did TransNamib pay healthy dividends, which were used to build a clinic or a school?”
Simonis Storm Securities economist Almandro Jansen added: “Namibia’s logistics corridor depends on low-cost, high-capacity, predictable inland transport for bulk commodities rather than port efficiency alone… The value loss extends well beyond higher transport costs and should be understood as a loss of corridor rents, service-export potential, and fiscal efficiency. Namibia’s economic upside from transit trade lies not in producing commodities, but in monetising movement through port fees, rail tariffs, fuel sales, logistics services, warehousing, insurance, and professional services.”
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