A far better idea than the BRICS New Development Bank’s approving a R5 billion loan to fix Transnet’s rail sector would be “to allow the private sector to operate rail and port facilities through public-private partnerships”, says the Institute of Race Relations (IRR).
In a statement, the IRR notes that in Parliament last week, President Cyril Ramaphosa “echoed the solution proposed in the IRR’s #WhatSACanBe paper, Infrastructure: Connect Communities, Create Wealth, for public-private partnerships in port and rail operation”.
The IRR points out that the New Development Bank (NDB) loan is guaranteed by the national government, “which is under increasing pressure to address its finances, failing service delivery and infrastructure investment”.
“Loaning more money to Transnet while it is still in a deep fiscal hole due to failures in management during the State Capture period is counterintuitive.
“Mining companies that are heavily reliant on South Africa’s rail infrastructure cannot wait for Transnet to restructure itself. The longer it takes Transnet to allow private rail operators, the more economic growth South Africa will lose out on.”
Says IRR researcher Chris Patterson: “The NDB loan places the South African Government in a difficult position. It acknowledges Transnet’s dire fiscal problems and is open to private sector investment, yet still wants to impose onerous access conditions on infrastructure that is in desperate need of repair.”
As the IRR’s report makes clear, “the solution is allowing businesses to own and operate rail infrastructure while ensuring that Transnet is restored to good health”.
“Successful public-private partnerships rely on compromise and co-operation, with government and business working in the best interests of South Africans and the economy,” Patterson concludes.
The paper can be read here.