Global consensus does exist– in one way, at least.
For a greener and more prosperous future, rail transport must serve as the backbone of our transportation systems. In South Africa, the pressing question is, how do we achieve this?
According to the African Development Bank Group, rail transport, due to its energy efficiency, reduced greenhouse gas emissions and lower cost per ton-kilometre, is expected to play a pivotal role in the conveyance of freight over long distances.
Investment in rail offers the dual benefits of economic development and climate impact mitigation. As we have seen in recent climate talks, these can rarely be separated to ensure a just transition.
Over the past five years, South Africa has been on an exciting economic renewal journey.
Government policy initiatives such as Operation Vulindlela, the National Logistics Crisis Centre (NLCC) and the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) have accelerated progress and added momentum to match the government’s ambitions.
Yet to unlock further economic potential and revitalisation, the country needs substantial strategic investment in infrastructure.
Last year, the government highlighted the need to raise R1.6 trillion in public sector infrastructure investment and a further R3.2 trillion from the private sector to meet the National Development Plan 2030 targets.
The transport ministry highlighted the need for substantial investments in rail infrastructure, estimated between R100 billion and R120bn for Transnet, and a further R120bn for the Passenger Rail Agency of South Africa (Prasa) to restore full functionality following the Covid-19 pandemic. These investments are critical to improve efficiency and support key sectors like mining and logistics, which are pivotal for the country’s economic recovery.
The impact of Covid-19 and the associated economic pressures that followed cannot be underestimated.
However, amid these challenges, it’s important to recognise the opportunities. Strategic partnerships with the public sector can unlock significant value for both passenger and freight rail.
Public-private partnerships (PPPs) offer a tangible opportunity to bridge the existing funding gap.
The National Treasury published amendments to the National Treasury Regulations (NTR) 16 and to key elements of municipal PPP legislation last year to bring it in line with recommendations based on a complete review of the PPP framework.
This legislative evolution in conjunction with granting third-party private operators access to the rail network is essential to drive further development and funding.
We have extensive experience collaborating with governments and public sector representatives across the southern African and other continental regions. We know first-hand the potential for success through strategic financing initiatives and joint ventures. It’s time to act decisively and capitalise on the opportunities.
If the notion seems far-fetched, consider that most recently, the United States announced a $600 million investment in new financing for a multi-country railway in Angola, and China made a similar commitment of $1bn in investment in railway infrastructure spanning Tanzania and Zambia. These examples illustrate the undeniable case for rail that South Africa cannot overlook.
South Africa has run some of the most successful PPPs, with Alstom (ex-Bombardier Transportation South Africa) having been part of the original Gautrain PPP, bringing investments and global expertise.
As the supplier of the Gautrain rail system, including rolling stock and signalling equipment, Alstom has maintained the infrastructure throughout the concession period, contributing to its reliability and operational success. This capability can be leveraged to expand the rail network in South Africa, bringing great efficiencies to the economy.
Alstom’s presence across southern Africa includes impactful collaborations that have created jobs and added to the efforts to revitalise the rail industry and expand inclusion in the economies they operate in.
For its part, Standard Bank has used its footprint across 20 African countries and six financial centres to advance bespoke funding for numerous strategic projects. Our partnership has tangible output.
We believe that by aligning strategic private sector and government priorities and by nurturing a conducive investment environment through targeted rail policy, South Africa’s broader infrastructure ecosystem can become the bedrock of a sustainable and inclusive economy.
The path to unlocking the country’s economic potential and achieving vital sustainability goals is clear: Prioritise substantial investment in rail infrastructure and embrace innovative funding models such as PPPs. The time to act is now; opportunities are ripe for the taking.
We are clear-sighted and realistic about the challenges facing the country but we remain unrelentingly optimistic about what can be done when a collaborative effort is advanced.
Working together, we can continue to grow this country and continent that we collectively call home.
- Tristan le Masne is managing director of Alstom Southern Africa and Luvuyo Masinda is CEO of Standard Bank Corporate and Investment Banking.
