The BRICS New Development Bank’s approval of a R5 billion loan to fix Transnet’s rail sector is deeply concerning.
A far better idea, recommends the Institute of Race Relations (IRR), would be to allow the private sector to operate rail and port facilities through public-private partnerships.
In Parliament last week, President Cyril Ramaphosa echoed the solution proposed in the IRR’s #WhatSACanBe paper, Infrastructure: Connect Communities, Create Wealth, for public-private partnerships in port and rail operations.
The New Development Bank (NDB) loan is guaranteed by the national government, which is under increasing pressure to address its finances, failing service delivery and infrastructure investment.
Lending more money to Transnet while it is still in a deep fiscal hole due to failures in management during the State Capture period is counterintuitive.
Mining companies that are heavily reliant on South Africa’s rail infrastructure cannot wait for Transnet to restructure itself.
The longer it takes Transnet to allow private rail operators, the more economic growth South Africa will lose out on.
The NDB loan places the South African Government in a difficult position.
It acknowledges Transnet’s dire fiscal problems and is open to private-sector investment, yet still wants to impose onerous access conditions on infrastructure that is in desperate need of repair.
As an IRR report* makes clear, the solution is allowing businesses to own and operate rail infrastructure while ensuring that Transnet is restored to good health.
Successful public-private partnerships rely on compromise and co-operation, with government and business working in the best interests of South Africans and the economy.
*The report can be read here.
