The road-to-rail shift needs to happen soon in SA

More private-sector participation in SA's rail sector -- as envisaged by the National Treasury -- could re-invigorate the industry and substantially raise the country's competitiveness. SA relies far too heavily on its road network to move goods, with roads accounting for about 70% of land freight in the country. This can be partly attributed to a lack of security in the rail sector, deteriorating rolling stock, ageing infrastructure, and general operational inefficiencies, the Treasury says in its much-lauded economic policy paper, which is currently up for discussion.

The reality is that the economy can no longer afford the cost of heavy trucks on public roads. To address this issue, the Treasury says SA should introduce competition in ports and rail, and should target private-sector participation to grow investments in these sectors. Third parties should be granted access to the core rail network, although Transnet should retain ownership of all rail infrastructure assets, the Treasury argues.

At the same time, a public-private partnership funding model can be used to roll out secondary rail line programmes, while the establishment of a rolling stock operating company should be investigated. Promoting a road-to-rail shift would improve the efficiency of the transport system and support the viability of Transnet's rail business, while increasing the ease of doing business -- a major focus area for President Cyril Ramaphosa. The Treasury acknowledges that investments in agricultural infrastructure, for instance, have stagnated in some areas because of dilapidated rail infrastructure, which is increasing the cost of doing business.

In line with the Treasury's proposals, Bombardier Transportation sees the private sector playing a key role in bolstering the rail sector, particularly in light of the government's financial constraints as it grapples with Eskom's debt burden. The leasing of locomotives is a likely scenario and several companies with experience in this field are already positioning themselves for this opportunity. Bombardier Transportation, which has partnered and co-operated with many leasing companies around the world, is keen to play its part.

We believe that private-sector participation would complement Transnet's own efforts to grow its general-freight business on the back of increased funding from the government. A combined effort is the best way forward. A major road-to-rail shift is the only effective way to reduce the cost of doing business in SA, and would meaningfully cut the country's carbon footprint.

Commuter transportation Aside from freight, there is an urgent need to prioritise mass commuter transportation in SA. In the absence of a safe and reliable commuter rail system, most South Africans have no option but to travel by road.

This has to change. Developing a quality rail network would stimulate the economy, cut carbon emissions, and reduce urban congestion -- a major growth impediment in SA and across Africa. It would also improve access to work opportunities for those who cannot afford to live near them and, in doing so, would help address spatial legacies.

But this requires substantial improvements in the quality and security of SA's rail network. To be feasible, such projects will require state subsidies and guarantees -- an investment tha,t nevertheless, would reap rewards for the government. The Treasury cites a study that found that a 30% decline in the cost of transport, logistics, and communication, coupled with a doubling of foreign investment, could raise GDP growth by 1.2 percentage points and create 620,000 jobs in a decade.

Local procurement will be critical in maximising the impact of new rail investments. This will demonstrate that investments in the rail industry have far-reaching positive impacts across the supply chain. SA should not delay in shifting towards the mass movement of goods and people by rail. Several of the country's peers across the continent are paying attention to this challenge, and we expect that Africa will soon have many more versions of SA's Gautrain or Egypt's up-and-coming Cairo Monorail project.

We firmly believe that investments in mass transit infrastructure are crucial to unlock exports, boost growth and competitiveness, and raise overall living standards.

o Lekwane is MD of Bombardier Transportation SA.

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