Substantive reforms are within reach

The latest Macro Review from the Centre for Risk Analysis, entitled SA’s Transport Blues, contains some riveting (if troubling) nuggets of data. CHRIS HATTINGH says there is a lot that government needs to do in order to reverse worrying trends.

In 2017, Transnet transported 226 million tonnes of goods by train. By 2022 this had declined to 154 million tonnes. With evermore businesses, importers, and exporters forced to use road freight – as a consequence of unreliability, breakdowns, and general inability on the part of Transnet – in 2022 the road-to-rail ratio by tonnage sat at 8:1. When fuel costs increase (the general fuel levy has increased by 225% since 2008, with the Road Accident Fund levy up by 425%), those additional burdens are added onto business operations. Ultimately, when producers, farmers, manufacturers, and all other players across various supply chains are forced to use more costly forms of transport, consumers bear the final brunt of higher prices. These findings and more are contained in the latest Macro Review from the Centre for Risk Analysis: SA’s Transport Blues.

Of course, not only businesses are negatively impacted by Transnet’s failures. For all the talk of wanting to address the legacy of apartheid and colonialism, many South Africans live in areas that are further from economic centres or hubs, relative to others. Millions of commuters rely on public transport; when different forms of this public transport break down, become more expensive, or become unsafe or unreliable as a result of violence or protest action, people cannot get to work and general economic activity suffers.

According to data for 2022 collated and provided in SA’s Transport Blues, 39.5% of households in the eight metropolitan areas included at least one member who used a minibus, sedan, or bakkie taxi. What ought to be a much cheaper and integrated form of public transport – buses – saw nowhere near as high usage. Only 3.9% of households in all of the metros relied on buses. The standout metro is Cape Town, where 8.8% of households prefer using the bus (Buffalo City in the Eastern Cape recorded the lowest figure, at 0.3%).

Furthermore, it is not simply a case of bus usage declining during Covid-19 and the lockdowns. Though the last few years have seen an accelerated decline, the signs were already prevalent before 2019. From 2011 to 2022, the proportion of households relying on buses declined from 5.6 to 3.9%. For travel to school, the clear standout as a mode of transport used in 2022 was walking, at 63.6%. A vehicle hired by a group of parents was second at 12.0%, and private vehicles third at 10.1%.

By far the most prevalent mode of public transport in South Africa is the minibus taxi. In 2022, 81.7% of monthly trips were by minibus taxi – nearly six and 20 times more than bus and commuter train monthly usage respectively.

One of the easiest “wins” to capacitate economic activity and growth would be to build, protect, and expand cheap and reliable railway networks. In this area, the data tell us that South Africa has wasted an incredible opportunity. Between 2008 and 2022, passenger rail journeys declined by 97%; the Macro Review identifies ailing infrastructure and old rolling stock as two of the biggest problems.

Given the context of a government under escalating fiscal pressure (increasing the possibility that fuel taxes could, in the worst case scenario, rise in the future), and globally renewed conflict in the Middle East that could drive international oil prices higher, those millions of South African commuters who rely on minibus taxis to commute, travel, visit family, and more could experience greater financial pressure.

The longer government delays opening up the country’s rail and port networks to real private sector investment and participation (not the kind of fringe tinkering that has been the case until now), the more South Africa will lose out. The logistics issues could act as a more substantial drag on growth than even the ongoing electricity problems. Nonetheless, the private sector will continue to adapt and, in many cases, simply bypass government by working through neighbouring countries. Whether government wants to facilitate growth, investment, and job creation or continue to hold onto and protect the Transnet monopoly remains their decision. What kind of legacy, positive or negative, those in cabinet wish to leave behind can still be shaped in either direction.