South Africa’s transport and logistics sector has long been recognised as a key obstacle to economic growth – but change is underway. In the latest PSG Think Big webinar, Minister of Transport Barbara Creecy sat down with award-winning financial journalist Alishia Seckam to discuss the future of South Africa’s transport infrastructure and the role it plays in the country’s economic recovery.
A year into the role, Creecy has spent the past 12 months getting to grips with one of the most complex portfolios in government, overseeing 16 entities ranging from Transnet and PRASA (Passenger Rail Agency of South Africa) to ACSA (Airports Company South Africa) and the Road Accident Fund.
To bring direction to this massive brief, Creecy and her department have outlined six key targets to guide the current five-year term. These include raising freight volumes on Transnet’s rail system from 149 million tonnes to 250 million tonnes per year; restoring passenger journeys on PRASA to 600 million annually by 2030 (up from 77 million); boosting port productivity to the international benchmark of 30 gross crane moves per hour; expanding ACSA’s passenger footprint to 42 million and tripling air freight volumes to 1.2 million tonnes per annum. Added to these is a critical target to reduce road accidents and fatalities by 50%.
“We are making progress,” she said. “It’s hard work, it’s very slow, but so far this year we’ve got the accident rate down by 9%, so I am hopeful that this target is achievable by 2030.”
Despite signs of improvement, Creecy acknowledged that Transnet’s poor financials remain a major concern. Moody’s recently placed most of its ratings on review for downgrade. To this end, government has applied for an infrastructure injection via Treasury’s budget facility, while also pursuing a broader programme of structural reform. “There is a whole broader process of rail reform that is taking place in our country,” says Creecy. “In December and January this year, we issued a network statement that called for third-party participation in our freight sector. It’s the first time this has ever happened in our country.”
This reform is centred around repositioning Transnet as a state-owned infrastructure provider, allowing third-party freight operators to use the network. “Transnet Freight will still exist, but they will be making their revenue from different freight operators that operate on their network,” she explains.
Private sector interest has been strong. “We were overwhelmed by the appetite,” she said, referring to a recent RFI process that attracted 11 000 site visits and 163 submissions. However, responsiveness will be critical given past failures in the procurement process. “We have seen situations where proposals put out by state-owned entities have not been appetising and interesting to the market.”
Creecy was clear that this new approach to reform would be based on tight rules and governance. She added that B-BBEE, financial viability and ensuring projects reach financial close without overburdening the state will all be key to structuring future requests for proposals.
Given that South Africa is 20 years behind its global peers in rail reform, Creecy admitted that time is not on government’s side. “Right now, we need to be investing in the region of about 15 to 20 billion a year into the network if we want to see that network functioning effectively and if we want to be able to increase the number of train slots.”
Still, the long-term potential remains promising. The National Rail Master Plan – expected later this year – will outline a vision for modernising South Africa’s rail network, including upgrades from the outdated Cape Gauge system and digitisation of controls.
While this vision unfolds, short-term gains are being pursued in partnership with business. She cited recent successes on the manganese line and hopes to replicate them on the coal line this year. She also stressed the need to align transport reforms with South Africa’s industrial strategy.
Beyond local gains, South African transport expertise could become a future export. “This revitalisation of rail is something that other countries in the subcontinent are already involved in,” Creecy said. “It is very important that we have that long-term perspective in terms of where we would want to go to with the future of the entity and the way in which it could support broader economic development in our country.”
