Rail reform moves are encouraging

Recent developments in the rollout of rail reform in South Africa are a positive sign that the process is going in the right direction.

The $1bn (R18.2bn) corporate loan granted to Transnet by the African Development Bank is a first step towards the improvement of the rail network, which the African Rail Industry Association (ARIA) estimates needs about R150bn rand of investment right now to achieve recovery.

This is an encouraging move and will allow Transnet to invest much-needed capital into infrastructure to allow rail services to contribute to the economic upliftment of the country. 

Three important rail reform milestones have been reached in the past few weeks:

• The Economic Regulation of Transport Bill has been signed into law. This includes the establishment of a Transport Economic Regulator responsible for regulating prices in the transport sector, investigating complaints, monitoring and enforcing compliance. The act seeks to establish a single regulatory body to focus on the economic regulation of the transport industry.
• Transport minister Barbara Creecy, in her first budget speech, announced the establishment of a planning component to consider the strategic value of branch lines and unlock both state and private investment in lines with economic potential and logistics capacity. The planning component will assist in furthering the expansion and regional integration of the rail network and ensure gradual compliance with standards such as the AU resolution on standard gauge. A private sector participation (PSP) unit will be set up to design, negotiate and contract projects so that innovative practices can solve current and future logistics challenges.
• At the opening of parliament, President Cyril Ramaphosa pledged massive government and private sector investment in infrastructure over the next five years. He stressed that South Africa needs an efficient freight rail network to carry minerals, agricultural produce, and manufactured goods to market. This will be done through the Freight Logistics Roadmap which is working to transform South Africa’s freight logistics system.

The Economic Regulation of Transport Act is crucial for the successful implementation of rail reform as strong regulations are closely tied to a successful rollout of private sector participation in the freight rail network. The act presents ARIA with an opportunity that must be fully leveraged. The importance of understanding this opportunity cannot be overstated, and it is crucial that everyone jumps on board.

Transnet is to be congratulated on the open and transparent manner in which it is managing the rail reform process

Capacitating the transport department is a hugely positive step, as minister Creecy is urging a speedy implementation of policy to revitalise the rail sector to foster sustainable growth. Ramaphosa's emphasis on infrastructure development is especially crucial for rail, as the state of the infrastructure is central to the industry's success.

Transnet is to be congratulated on the open and transparent manner in which it is managing the rail reform process. Information sessions on the Interim Rail Economic Regulatory Capacity (IRERC) have been conducted in a spirit of camaraderie and inclusion. This is a positive step towards the revitalisation of the rail industry in South Africa — an industry which will make a meaningful contribution to the country’s GDP and create employment.

Efficient freight rail brings both confidence and price competitiveness to a nation’s upstream economy. Rail freight volume needs to grow significantly, both to arrest declining volumes and to save the road infrastructure from collapse. 

Rail reform is crucial for bolstering investor confidence, and the actions taken by the government and Transnet to advance this reform agenda signal a clear commitment to progress. It is encouraging to witness these efforts, as they foster much-needed market confidence in the revitalisation of our rail industry.

As an industry body ARIA is fully committed to working with all partners to advance the rail sector. Our members’ livelihoods depend on it.

• Nhlapo is CEO of the African Rail Industry Association