The Institute of Race Relations (IRR) has expressed deep concern over the Brics New Development Bank’s approval of a R5-billion loan to fix Transnet’s rail sector.
The organisation believes a far better idea would be to allow the private sector to operate rail and port facilities through public-private partnerships.
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.
However, the IRR is of the view that loaning 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,” says IRR researcher Chris Patterson:
“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.”
The IRR makes the point in its #WhatSACanBe paper, Infrastructure: Connect Communities, that 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 cooperation, with government and business working in the best interests of South Africans and the economy,” Patterson says.
The paper can be read here.
