Road Freight Association: Medium-Term Budget Policy Statement (MTBPS) Must Apply Stents to the Transport Arteries of South Africa
The Department of Transport (DoT) prides itself in stating that transport is the “Heartbeat of South Africa’s Economic Growth and Social Development”. The Road Freight Association (RFA) notes that this must be borne out in the direction and commitment shown by the Minister of Finance, Enoch Godongwana – especially with regard to the prioritisation of spending and the focus on fiscal control and the clear understanding of what our transport requirements are.
This is the first opportunity for the government of national unity (GNU) to effect long-term behavioural change (and direction) in government spending and budgeting, which will greatly influence future prospects of the general economy of South Africa. We come from an era of very poor fiscal control – coupled with waning growth and development underpinned by the loss of global and local business confidence. This recipe can only result in a failed national economy – and the critical ingredients of fiscal control and discipline, prudent investment and support of entrepreneurial growth through business germination policies must be added now.
It is common knowledge that a plethora of political, social, economic and institutional challenges has dwarfed the enthusiasm of government. However, the opportunities to turn around the status quo, as well as the abundance of fresh approaches and ideas to resolve the challenges – far outweigh the recent events and poor showing.
The Association reiterates its call that government needs to invest in infrastructure, equipment, processes and cooperative platforms that will make South Africa the place where business (from all over the global market) would want to be, creating an environment where these businesses would be able to grow, flourish, develop, enhance and research their own products and processes and, in so doing, be able to efficiently and effectively market and deliver (sell) these products to any customer, anywhere in the world.
Government spending in areas where no value or real service delivery accrues (at an ever-increasing quantum realising over 230% since 2008) must be reversed – or at the very least quantified in terms of benefit to revenue into the country. The public sector wage bill has mushroomed by 220% since 2008 – and this has had no other effect – other than raising state employee wages, without the consummate increase in service delivery. Sovereign debt had increased to R5.2 trillion by 2024 with another addition of R365 billion being projected for 2025. South Africa cannot continue to service such rapidly increasing debt levels.
It is not a secret that the logistics supply chain is under threat, with Transnet and its subsidiaries holding the monopoly on all the key aspects (eg. ports and railways) in the logistics supply chain – apart from the road freight logistics sector (including warehousing and related activities).
The government is acutely aware of the status quo – even having gone so far as to the President having invoked the National Logistics Crisis Committee (NLCC). Transnet’s high debt (around R230 billion) and a maintenance backlog (around R70 billion) are among the most serious stumbling blocks to its recovery plan – reported to the Parliamentary Portfolio Committee on Transport on 15 October 2024.
Further: Transnet informed the committee that relating to the maintenance backlog, there were significant infrastructure maintenance backlogs for all networks estimated at R51.4bn for network restoration, and R19.2bn for sustaining costs to the core network. Declining asset conditions have resulted in reduced network capacity, poor reliability of key corridors and declining port and rail volumes resulted in reduced network capacity, poor reliability of key corridors and declining port and rail volumes. (IOL: 16 Oct 2024)
The RFA notes the references to some transport projects – notably the Gauteng Freeway Improvement Plan (GFIP) – e-tolls), vague references to passenger transport and the Passenger Rail Agency of South Africa (PRASA) and a fleeting nod to developing landside facilities at the Port of Cape Town.
There was no mention of any immediate action to deal with the equipment at our ports – which almost singularly cripple operations, nor key handling and infrastructure to ensure rail moves bulk commodities.
It does not come as a shock then, neither a wonderous revelation, that the Minister of Finance (through the MTBPS) needs to take into consideration the dire state of the state-run logistics monopoly (in so far as the ports, rail, pipelines and airports are concerned) and to either heavily invest in these modes under sound direction from the private sector, or to engage in real co-operation through the transfer of these ailing facilities, infrastructure and networks to the private sector so as to ensure that the logistics chain does not collapse that repair and enhancement can occur timeously, and that South Africa can effectively play a role in regional and international logistics networks.
Solid funding, with clearly defined deliverables, clearly identified accountable entities and individuals and a networked plan to ensure the development of freight nodes, villages, pathways, routes and chains will ensure the gradual and enhanced development of a nuanced and intertwined cooperative logistics supply chain – both to drive domestic business and economy as well as to grow business, increase employment and provide the foundation for a quantum leap in trade efficiencies and capabilities.
In conclusion: Apart from the R5 billion or so earmarked to SANRAL for the GFIP (the Etoll saga) – there are no allocations to address the dire straits that our ports and rail find themselves in. Perhaps this is so the private sector can play a larger (or a more efficient and involved) role in getting our logistics network back on track. We haven’t much time to resolve this. Even more worrying – we don’t have the financial depth required to reverse the decay. Road won’t be able to carry this indefinitely – huge investment in terms of maintenance, refurbishment and development will soon come knocking there too.
A realistic, sober and considered MTBPS – but a concerning one in terms of the future of transport networks and the logistics supply chain of South Africa.
By Gavin Kelly, CEO of the Road Freight Association
