Seizing the global trade shift with critical infrastructure reforms
By Chris Hattingh
THE world is entering a period of economic turbulence, driven by shifting trade policies and investment flows. The incoming US administration is set to trigger structural shocks that will ripple across global markets, making the landscape increasingly complex. Unlike past cycles, which were largely commodity-driven, these disruptions will be deep and lasting.
South Africa at the crossroads of global trade shifts
For emerging economies like South Africa—grappling with sluggish growth and mounting debt—this is a pivotal moment. The country has a clear choice: implement bold, pro-growth reforms to become more resilient and capitalise on evolving trade patterns, or remain stagnant and vulnerable to global volatility.
Modernising infrastructure to capitalise on global trade
A key determinant of success will be South Africa’s ability to modernise its trade infrastructure, particularly its ports and railways—both of which have long been plagued by inefficiency and mismanagement. However, a shift may finally be underway. The extent to which the government and Transnet genuinely embrace private sector investment will define whether South Africa can harness the opportunities presented by these global shifts.
Breaking Transnet’s monopoly: A key to global trade success
For decades, Transnet has monopolised rail infrastructure, stifling competition and innovation. But the recent Request for Information (RFI), issued on 23 March by the Department for Transport, signals a potential turning point. Transnet’s Private Sector Participation unit will assess private-sector involvement in critical railway corridors, including:
- The Northern Cape to Saldanha Bulk Minerals Corridor
- The Northern Cape to Nelson Mandela Bay Corridor
- The Limpopo and Mpumalanga to Richards Bay Bulk Minerals Corridor
- The Intermodal Supply Chain PSP Project
Private sector investment: Essential for global trade growth
Transnet’s financial position is dire, and the government’s fiscal constraints mean that private-sector investment is no longer optional—it is essential. But for investment to be meaningful, it cannot be limited to mere cash injections into Transnet. Without urgent regulatory reforms to break Transnet’s monopoly and allow private ownership of rail infrastructure, the country’s railway network will continue to deteriorate.
If South Africa fails to act decisively, competitors like Namibia and Mozambique will continue to siphon off business, further weakening the country’s trade position. On the other hand, if South Africa embraces a competitive, modernised rail and port system, it could emerge as a dominant trade hub on the continent.
Unlocking Africa’s potential through enhanced global trade
Beyond benefitting South Africa alone, successful public-private partnerships in infrastructure could position the country as a key driver of the African Continental Free Trade Area (AfCFTA). Intra-African trade remains dismally low at just 17% of total trade—compared to 68% in Europe and 59% in Asia. Given the rising uncertainty in global trade, boosting regional trade is more crucial than ever.
Unlocking the full potential of the AfCFTA will require tackling non-tariff barriers such as inefficient ports, cumbersome permit processes, and high crime rates.
Addressing these challenges will not only enhance trade within Africa but also attract greater investment into manufacturing and other key sectors, strengthening South Africa’s long-term economic prospects.
The choice is clear. If South Africa embraces reform, allowing meaningful private-sector participation in rail and port infrastructure, it can position itself as a resilient, competitive player in global trade. If it clings to outdated monopolies and protectionist policies, it risks falling behind, missing a once-in-a-century opportunity to reshape its economy.
The time for action is now.
