The inauguration of South Africa’s 7th Administration signals a renewed focus on resolving the challenges in the transport sector. This was evident on 1 October 2024, when President Cyril Ramaphosa, alongside prominent business leaders, launched “phase two” of the Government Business Partnership at the Government Business 2 event. This phase is aimed at tackling key national issues, especially within transport and logistics.
The initiative was further emphasized during a recent panel discussion at the Johannesburg Mining Indaba, where Eskom and Transnet CEOs, alongside Rudi Dicks from the presidency and other business leaders, reaffirmed their commitment to solving critical challenges, particularly in energy and logistics.
Revitalized Focus on Transport
The Government Business Partnership, originally launched over a year ago, aims to address various national challenges, including electricity supply, logistics inefficiencies, and corruption. The partnership, which gained momentum during the pandemic, seeks to boost South Africa’s economic growth to over 3% by the end of 2025.
Key to this collaboration is a renewed focus on transport, with plans for a private sector investment of R28 billion in rail infrastructure, which will increase freight volumes from 170 million tons (Mt) to approximately 193 Mt. Other initiatives include fast-tracking the finalization of the Network Statement and pricing schedules, encouraging third-party operations on the rail network by the end of 2024. Moreover, discussions are underway to establish an independent infrastructure manager for rail and ports, a step toward long-term stability in the sector.
A Strategic Framework for Infrastructure Development
A critical part of this strategy is the Economic Regulation of Transport Act (ERTA), signed into law by President Ramaphosa on 6 June 2024, although its commencement date is yet to be announced. ERTA is poised to provide greater regulatory oversight, fostering efficiency and transparency in the transport sector.
Transport Minister Barbara Creecy recently highlighted the importance of restoring the country’s transport systems, describing roads and railways as the “lifeblood of the nation.” Revamping these sectors is essential for economic development, supported by input from the National Logistics Crisis Committee (NLCC), which promotes collaboration between the private and public sectors.
Legal Framework for a Better Transport System
ERTA is expected to play a crucial role in transforming South Africa’s transport infrastructure by establishing a single Transport Economic Regulator to oversee price control across all transport modes, including road, rail, shipping, ports, and aviation. This regulator will be tasked with approving tariffs and ensuring fair pricing while preventing monopolistic practices.
If effectively implemented, ERTA could encourage competition, reduce corruption, and enhance efficiency, especially in supply chain management. By establishing consistent regulatory standards and fair pricing mechanisms, ERTA aims to create a more stable and equitable business environment in the transport industry.
Boosting Private Sector Participation
The Department of Transport is also working to create a framework for increased private sector involvement in the port and rail sectors. This framework will be managed by a dedicated Private Sector Participation (PSP) Unit to oversee investment projects from inception to completion.
Public-private partnerships (PPPs), whether through formal government tenders or informal collaborations, are becoming a key feature of the government’s strategy to promote inclusive economic growth. Since 2023, these partnerships have already yielded significant results, including reduced load shedding, improvements in rail and port operations, and a decrease in security incidents affecting critical infrastructure.
Minister Creecy and Transnet CEO Michelle Phillips both emphasized that the involvement of the private sector in sectors like electricity and logistics marks a major shift for industries that have traditionally relied on public entities like Eskom and Transnet.
Project Vulindlela: Accelerating Structural Reforms
Project Vulindlela, a government initiative aimed at fast-tracking structural reforms, is central to this effort. The project seeks to address critical challenges in sectors such as energy, water, digital communications, and transport. Specifically in the transport sector, it aims to rehabilitate the rail network and improve freight logistics through partnerships between public and private entities.
Since its inception, Project Vulindlela has made significant progress, including advancing the Freight Logistics Roadmap, which is designed to increase competition and efficiency. The project has also facilitated the introduction of private sector participation in container terminals and open-access policies for the freight rail network.
By aligning with global trends and promoting stakeholder collaboration, these initiatives are positioning South Africa to leverage its strategic advantages and drive sustained progress in the transport and logistics sectors. This, in turn, is expected to strengthen the country’s economy and foster long-term resilience.
