The dire state of Transnet is crippling South Africa's economy
The Kwa-Zulu Natal highways were once quiet and peaceful.
However, the current situation paints a different picture, with hundreds of
coal trucks thundering through small towns to the port of Richards Bay. This
increase in traffic has led to safety concerns and tragic accidents.
emphasizing the need for an alternative transportation method, which is rail.
South Africa's rail network, operated by Transnet, is facing
severe challenges, hindering the efficient movement of goods. The decline in
the use of trains for coal transportation is a missed opportunity, considering
the surge in international coal prices. The gap between coal production and
export represent a substantial economic loss, impacting not only coal miners
but various sectors, with an estimated total hit to South African firms
reaching about 400 billion rand, equal to 6% of the country's GDP. Losses to
coal miners due to inability to export what they have dug represents a loss of
at least 80 billion rand per year.
While Eskom’s failures are widely known, Transnet's failure
in the critical of role of managing the rail network, ports, and pipelines is equally
significant. However, Transnet is grappling with internal challenges that echo
Eskom's struggles and the repercussions extend beyond South Africa's borders.
South Africa's rail network faces complexities stemming from
decisions made under British colonial rule and apartheid. The narrow railways
were suitable for earlier needs but lack the capacity for heavy loads compared to the wider gauges used by most other countries. The ANC's decision to maintain
uneconomical rural rail lines has contributed to the problem, exacerbated by
neglect, patronage, and corruption within Transnet.
During the "state capture" era under Jacob Zuma,
Transnet was at the centre of corruption scandals, involving irregularly
awarded contracts and overpriced locomotive purchases from China. During the
era of “state capture” under Jacob Zuma, Transnet accounted for 70% of all
irregularly awarded contracts, the greatest being the purchase of over 1000
overly priced locomotives from China. This led to financial losses, a reduction
in working locomotives, and disruptions to rail services.
Vandalism, particularly the theft of copper cable, is an
ongoing issue, further compromising the rail network's functionality. In the past year, more than 1,700 kilometers of copper wire have been stolen. Short-sighted
management decisions, such as a significant increase in the wage bill while
reducing maintenance spending, have contributed to the decline in Transnet's
efficiency. It is estimated that Transnet spends less than 30% of what is
required for the maintenance of rail networks.
The impact of these challenges is evident in Transnet's
financial performance, the government's bailouts reflect the severity of the
situation.
While South Africa boasts world-class industries, including mining and manufacturing, the inefficiencies in the transportation infrastructure pose a significant obstacle to economic growth. The delayed progress in allowing private firms greater access to Transnet's network highlights the challenges in addressing these issues promptly. Miners have resorted to utilising railway networks and ports in neighbouring Mozambique and Namibia to export coal and iron ore.