Tristan le Masne and Luvuyo Masinda
Global consensus does exist – in one way, at least. For a greener and more prosperous future for us all, 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 recently concluded climate talks, the two things can rarely be separated to ensure a sustainable and just transition.
Through the course of 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 forward-thinking Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) have undoubtedly accelerated progress and added substantial momentum to match the government’s ambitions.
And yet, to unlock more of its economic potential, revitalisation and sustainability aims, the country will need 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 targets set out in the seminal National Development Plan by 2030.
The Ministry of Transport highlighted the need for substantial investments in rail infrastructure, estimated between R100-billion and R120-billion for Transnet, additionally a further R120-billion for the Passenger Rail Agency of South Africa (PRASA), to restore full functionality following the Covid-19 pandemic. These investments are critical to ensure improved efficiency of the rail network and to support key sectors such as mining and logistics which are pivotal for the country’s economic recovery.
While it is common knowledge that the South African railway network has faced substantial challenges it is essential to view these obstacles in light of the opportunities they present. The impact of COVID-19 and the associated economic pressures that followed cannot be underestimated in this regard. Similar challenges were experienced in other parts of the world.
However, amid these challenges, it’s important to recognise the immense opportunities that exist. 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 last year, and key elements of municipal public-private partnerships (PPPs) legislation, to bring it in line with recommendations based on a complete review of the PPP framework. This evolution, in conjunction with the granting of access for third-party private operators to the core rail network in South Africa, is essential for driving further development and funding.
With extensive experience collaborating, with governments and public sector representatives across the Southern Africa 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 these opportunities.
If the notion seems far-fetched, consider that most recently, the United States announced a US$600-million investment in new financing for a multi-country railway in Angola, and China made a similar commitment of US$1-billion in investment in railway infrastructure that spans Tanzania and Zambia. These examples illustrate the undeniable case for rail, a case 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. Alstom, with being the provider of the full Gautrain rail system, including the rolling stock and signalling and having maintained the entire Gautrain rail system throughout the concession period, with high levels of reliability and availability, has contributed significantly to its 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 vast footprint across 20 African countries and six financial centres to advance the bespoke funding of numerous strategic projects. Ours is a partnership that has tangible output.
We believe that by aligning strategic priorities of the private sector with those set out by the government, and by nurturing a conducive investment environment, through targeted policy in rail, South Africa’s broader infrastructure ecosystem can become the bedrock of a sustainable, broad and inclusive economy that touches the citizenry at both a personal and freight level.
In conclusion, the path to unlocking South Africa’s economic potential and achieving vital sustainability goals is clear. By prioritizing substantial investment in rail infrastructure and embracing innovative funding models such as public-private partnerships, the nation can lay the groundwork for a stronger, more equitable future. The time to act is now; the opportunities are ripe for the taking.
We are clear-eyed and realistic about the nature of the challenges before 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 the managing director of Alstom Southern Africa, a multinational rail group with substantial technical strength in setting up and executing PPPs in rail, as well as long-standing business interests in South Africa.
Luvuyo Masinda is the CEO of Standard Bank Corporate & Investment Banking. They write in their personal capacity.
