[Letter] Masondo’s concerns on unlocking private sector role in rail should be heeded

Chris Hattingh | 26 Oct, 2022
Private investors are being asked to sink billions into locomotives, network maintenance and infrastructure upgrades, but Transnet has the ultimate say.

Deputy finance minister David Masondo’s concerns regarding the lack of progress in unlocking private sector involvement and investment in railways should be heeded ("Think again on time frame for private access to railways, says Masondo”, October 23).

Speaking to Business Day at the Kgalema Motlanthe Foundation inclusive growth forum, Masondo said: “The main concern has been the private actors saying the timeline for us to operate on rail has been too short. Two years is not enough if you were to invest in locomotives... so it’s something that we are going to be looking at.”

Much has been said of “reforms” taking place in SA, but to taking the example of rail, can it truly be considered reform if the period of investment is only for two years? Furthermore, Transnet will remain the custodian of infrastructure.

This means private investors are being asked to sink billions into locomotives, network maintenance and other infrastructure upgrades, but the state-owned company has the ultimate say over what happens with said infrastructure.

Given the declining performance of most of the country’s state-owned enterprises, as well as their parlous financial situations, is this the best route to unlock substantive private sector investment?

The myriad inefficiencies at the country’s ports, and the unreliability and safety issues associated with using rail, all combine to increase the cost of doing business in SA. Exporting raw materials and goods has become an ever-riskier proposition, typified by the latest strike at Transnet.

Absent getting the basics of trade right — that is the infrastructure, both physical and systems — the country will lag further behind other emerging markets and inhibit the transformative potential of the Africa Continental Free Trade Area.

Letter originally appeared here.

CRA events are for subscribers only.

Click here to subscribe

Or click here to log in if you're already a subscriber