In a pivotal discussion on South Africa’s railway and logistics sector, Mmetsa Komane, Director of Rail Transport Equipment at the Department of Trade, Industry and Competition (DTIC), echoed the nation's efforts to stimulate job creation and economic growth through the logistics and railway sectors.
Komane was addressing the Annual General Meeting of the African Rail Industry Association (ARIA).
In 2011/2012, the rail industry was identified as a key driver for localisation and export expansion. It was during this period when designation work began under the Public Finance Management Act (PFMA) regulations. This designation allowed Transnet to implement a local content threshold during the 1,064 locomotive programme alongside PRASA’s similar initiatives.
The Constitutional Court in 2022, repealed the designation framework, eliminating formal legislation that compelled state-owned enterprises (SOEs) like Transnet and PRASA to prioritise local content.
Nevertheless, Komane said the DTIC has continued collaborating with these entities to sustain localisation momentum. Although Transnet and PRASA are no longer legally required to enforce local content mandates, they have voluntarily integrated such considerations into their tendering processes. This effort has helped preserve some local manufacturers and mitigate financial challenges within the sector.
She noted that a major concern remains the high volume of imported rail sector components. While some specialised parts must be sourced internationally due to intellectual property constraints and production scale, there are many localisation opportunities, she added. DTIC aims to work with universities and state-owned companies to identify and develop more locally manufactured parts.
The repeal of localisation designation notes has led to a shift towards the Public Procurement Act of 2024. This new legislation includes preferential procurement policies that will redefine how localisation is implemented in key industries.
Komane said the railway sector must provide input on defining competitive advantages and manufacturing capacities within the sector to ensure effective procurement policies. Komane underscored the importance of existing financial support mechanisms, such as the Industrial Development Corporation (IDC) funding programme. This R1.5 billion fund is available to assist manufacturers in reducing production costs, provided they meet transformation requirements such as a Level 4 B-BBEE rating or demonstrate a plan to achieve it.
Additionally, the DTIC collaborates with the Council for Scientific and Industrial Research (CSIR) to support industrialisation, she added. CSIR’s National Foundry Technology Network helps optimise production processes and commercialise new products.
In addition, Komane said the National Industrial Participation Programme (NIPP) is another strategic initiative. Under this programme, original equipment manufacturers (OEMs) have commitment obligations to DTIC, creating opportunities for local firms in the rail sector.
James Holley, ARIA’s immediate past chairman, acknowledged the DTIC’s commitment to consultation and emphasised the need for robust engagement from industry stakeholders. He stressed the importance of leveraging available support programmes, including funding and research collaborations, to strengthen the local manufacturing base.
Written for Railways Africa by Chamwe Kaira
