Crooks, spooks, and a transport mythtake

South Africa’s economy is staggering under crises of debt, crime, and collapsing logistics. With rail and ports in disarray, government clings to failed policies. Is our “revival strategy” real reform, or yet another costly mythtake? NICK PORÉE suspects that the latter could apply…

South Africa’s economy is once again at a crossroads reminiscent of the 1980s. We face crises in international relations, exports, logistics, crime, debt, water, electricity, education, defence, and government – and the lack of meaningful responses is far from reassuring. What is needed is a National Economic Recovery Organisation (NERO) – not fiddling like its namesake, but consisting of competent business professionals and active politicians to drive a Brazil-style revival. Only then can we attract investment, provide serious professional industrial training, develop entrepreneurship, and create jobs.

Instead, we have crooks responsible for our massive debts; spooks without relevant commercial qualifications or practical experience, paid to perpetuate the inefficiencies of bureaucracy; and inflated boards of civil service agencies and State-Owned Enterprises (SOEs) filled with kooks* who neither make decisions nor take action and who are not held accountable to shareholders despite dismal and corrupt performance (yet still receive multimillion rand salaries). Then there is a cohort of isiPhukuphukus* dabbling in economic policy formulation without experience, understanding, or competence.

Voices in parliament resist privatisation, claiming it only “supports profits, not service”. This is a gross delusion of economic freedom that assumes the possibility of sustainable businesses without either profit or service. This anti-business stance is used to justify the 700 bankrupt and unsustainable SOEs, alongside selective Black Economic Empowerment (BEE)-driven government philanthropy disguised as “redistribution”, which pretends to stimulate industrial activity.

Logistics and transport failures

In logistics, we see a stubborn adherence to policies that have cost the country its future as a competitive global economy. Freight and passenger railways and the ports have committed the classic transport management sin of letting equipment deteriorate through deliberate diversion of profits for nefarious purposes. The current parlous state of SOEs was entirely predictable, given two decades of bureaucratic corporate policies and management unaccountability.

We now face an impossible situation, brushed aside as though economic logic were optional and reliance on taxpayers a viable substitute for business efficiency. The figures, though speculative, paint a grim picture – mocking the president’s claims of private sector engagement.

Transnet Rail

Estimated Transnet Debt – Numbers in the Wind:

• Current debt: R135 billion
• DOT advance: R21 billion
• Treasury facility: R51 billion
• Latest Treasury grant: R94.8 billion
• Interest on debt: R60 billion (possibly much more)
• Total over 5 years: ~R360 billion

Transnet has possible earnings from existing bulk freight operations of R10-15 billion/year, or roughly R75 billion over five years. To pay back debts over five years, however, taxpayers would in effect subsidise rail at around R3,700/tonne (about R144 billion/year) simply to keep a national non-profit afloat and maintain 25,000 union members in comfort.

Any private operator track access charges will have to fund track rehabilitation and maintenance, not the restoration of Transnet Freight Rail (TFR). Track access fees will also be capped by their effect on costs compared with road haulage.

Instead of breaking up the monolith into sustainable, competitive companies, the state persists with a glacial “revival strategy” under centralised SOE control. A rationalised network alongside commercialised ports – run by an independent rail infrastructure agency – would create scope for real investment and expansion.

PRASA

PRASA continues to burn money repairing Covid-era mismanagement. The Auditor General’s report points to multiple undisclosed debts, including:

• A R7.5-billion tender to refurbish defunct rolling stock with no future use.
• Outstanding payments to contractors, Eskom, and others.
• A massive bill to restore vandalised infrastructure after the security debacle.

Gautrain

The much-vaunted Gautrain is in fact a financial disaster. Grossly inflated ridership projections at inception led to Gauteng Province paying a “patronage guarantee” of some R22 billion over the past decade. In 2023/24 alone, the province paid almost R3 billion – essentially the only thing keeping Gautrain afloat.

Ports

The insistence on state participation and concessioning in restructuring port terminals does not foster competition or sustainability, but rather creates quango monopolies. By contrast, 30-year build-operate-transfer contracts would attract world-class global port developers and operators.

Road vs rail realities

A lot has been said and written about road versus rail. Unfortunately, some statements do not take into account the reality of the situation, which includes the following:

• Freight rail is only viable for homogeneous bulk commodities in trainload volumes – it cannot compete with road haulage for heterogeneous intercity cargo.
• Bulk tonnage is finite and declining, unless mining and manufacturing policies change radically.
• More bulk is already shifting to road – for example to Matola, Durban, Gqeberha, and Lüderitz.
• At best, only 15 million tonnes per annum (mtpa) bulk and 20mtpa breakbulk could realistically shift to rail – nowhere near the official 250mtpa target.
• Breakbulk transfer would require massive private multimodal investments.
• Private TOCs would shrink Transnet volumes and revenue, but not its debt.
• Road haulage efficiency, flexibility, and new technology set a ceiling on both rail pricing and volume.
• Urban passenger transport requires centralised, integrated management across modes – something PRASA obstructs.

The much-touted objective of shifting freight from road to rail ignores the inherent advantages of road for most cargo, as shown in the table below. Customer choice is driven by total logistics costs, service, flexibility, and reliability – all favouring road in many cases. That is why road already carries 1,500mtpa against rail’s 150mtpa.

It may in fact be cheaper to close all but two freight rail corridors and move the rest to road using 67-tonne Performance-Based Standards (PBS) vehicles and high-capacity superlinks for general cargo.

Instead of planning a competitive 30-year multimodal future, government persists with its Orwellian Authorised Nepotism and Corruption (ANC) approach, ensuring only Black Elite Enrichment (the true BEE) while deepening poverty. The covert SOEs will continue to repeat past errors, with myopic visions that strangle competitiveness, deter investment, and drain the fiscus for years to come.

Truly, Einstein was right: “Insanity is doing the same thing over and over again and expecting different results.”

* A bunch of people whose ideas or actions are very strange or foolish

** Idiots