Transport and Logistics: Growth-enhancing reforms are key to improving the sector

Dec 8, 2023 12:23:55 PM

"...the public sector is projected to spend R903-billion on infrastructure, and the largest portion of this amount, around R448-billion, would be spent by state-owned companies, public entities, and public-private partnerships."

A freight truck driving on a highway the sun setting in the background

By Sinazo Mkoko

Delivering his budget speech in February this year, Finance Minister, Enoch Godongwana, said the government is implementing growth-enhancing reforms in key sectors, including the transport sector, to boost growth and improve the efficiency of South Africa's Transport and logistics infrastructure.

Hon. Godongwana said the public sector is projected to spend R903-billion on infrastructure, and the largest portion of this amount, around R448-billion, would be spent by state-owned companies, public entities, and public-private partnerships. The spending plans are mostly for strategic projects in different sectors, and transport and logistics would spend an estimated R351.1-billion, including for SANRAL to improve the road infrastructure network.

Addressing Transport and Logistics constraints

The National Treasury stated that constraints in logistics have negatively affected economic growth and employment.
"More than a quarter of long-distance freight traffic has shifted to roads in the past five years as a result of severe deterioration in the freight rail network. This is due in large part to historical underinvestment in the network."

The National Treasury said several reforms are underway to support recovery in the transport sector, and the Economic Regulation of Transport Bill, which will establish the transport regulator, has been tabled in Parliament.

This was welcomed by the relevant stakeholders within the sector, with the CEO of Ctrack Africa, Hein Jordt, stating that they are holding thumbs that the proposed reforms are put in place efficiently and effectively as they are "most certainly required for the ongoing survival of many of the sectors of the transport industry."

"The South African economy is in dire need of a functioning logistics network and all stakeholders should unite to address the obstacles in the industry. From this point of view, recent developments to address the sector’s challenges, as mentioned in the 2023 National Budget, is indeed a step forward and welcomed," he said.

Freight logistics reforms: Ports and rail

A decline in exports has been recorded due to the poor performance of South Africa’s freight logistics system.

The Treasury said implementing these economic reforms was crucial to reversing the current trend in performance.

"Achieving a turnaround in the ports and rail network will have a positive impact on output, exports and ultimately economic growth. Interventions to improve operational performance, encourage private sector participation and enable increased competition and investment are required to arrest the sector’s decline." - National Treasury.

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