Africa Update Feb 9 - All Aboard!
Is South African Rail Back On Track?
Is There Light at The End of The Tunnel For SA Rail Reform?
An underreported story in the South African transport space may well be a light at the end of the tunnel for the countries struggling bulk commodity exporters. After much uncertainty, local authorities have taken yet another committed step towards partial railway privatisation by signing the Luxembourg Rail Protocol. This treaty smooths over the investment process for rolling stock (locomotives, train cars etc) by allowing these assets to be added to an international registry. This then simplifies the process of financial claim & ownership confirmation allowing for much easier cross-border financing.
This announcement is but the latest of many new green shoots seen sprouting out of the parched earth where the SA rail industry found itself only a few years ago. In December last year,Transnet, the struggling state railway company, presented its “Network Statement” a document that laid out the entity’s intent to allow private railway operators to start utilising its network by no later than April of this year. Other private stakeholders are taking things further still. In late January various coal & iron ore exporters announced that they were negotiating agreements with Transet for the refurbishment of some of the country's key export lines (Saldanha & Richards Bay). Estimated to cost over ZAR 21 Billion, these projects aim to bring the entity’s capacity up to 193m tonnes a year, up from the comparatively feeble 52m tonnes it delivers presently.
When paired with news of ongoing privatisation efforts at the country’s port terminals, it would appear that South Africa’s GNU coalition government has made the refurbishment of the country's transport infrastructure a key priority. Such a strong shift towards private sector involvement speaks to some desperation at the top level, as national policies have otherwise grown ever more in favour of expropriation and nationalisation in various other sectors. Amid global uncertainty and anemic local growth the abandonment of rail in favour of more expensive freight trucking was an expense that some of SA’s world-class industries (Iron ore & oranges amongst others) simply couldn't afford in the long term. While it’s not all sunny skies for local exporters just yet, these recent announcements certainly hold out hope that SA might yet reclaim its international competitiveness.
Sources consulted
South Africa Coal, Metal Exporters to Spend Billions on Rail', SupplyChainBrain, 27 January 2025. https://www.supplychainbrain.com/articles/41091-south-africa-coal-metal-exporters-to-spend-billions-on-rail
South Africa Ratifies the Luxembourg Rail Protocol, Railways Africa, 2 February 2025, https://www.railwaysafrica.com/news/south-africa-ratifies-the-luxembourg-rail-protocol
"Port’s association welcomes turning point for South African Rail", Windhoek Observer, 15 January 2025. https://www.observer24.com.na/ports-association-welcomes-turning-point-for-south-african-rail/