The one thing South Africa really has to get right in 2025

 ·13 Jan 2025

If South Africa wants to ensure sustainable growth and long-term economic stability, it needs to prioritise fundamental reforms for its logistics sector in 2025.

This is the view presented by Dr Juanita Maree, CEO of the Southern Africa Freight Forwarders Association (SAAFF).

“The logistics sector plays a pivotal role in South Africa’s economy, its impact extending across the broader SADC region and beyond,” said Maree.

However, the country faces some of the highest logistics costs in the world, adding to inflationary pressures, placing strain on livelihoods.

One of state-owned logistic group Transnet’s most pressing problems is congestion at its ports and limitations in rail freight capacity, which are stifling trade and costing the economy over R1 billion daily.

Investec Chief Economist, Annabel Bishop, said that despite some improvements, “capacity constraints at Transnet overall remain dire,” which is impacting GDP growth by around 3% per annum.

“This is likely to remain the major limitation on GDP growth this year for South Africa, with modest inroads made on capacitating Transnet only expected to add a per cent to growth, as South Africa’s GDP lifts by 1.8% y/y in 2025,” added Bishop.

As such, Maree said that optimising logistics is crucial for fostering sustainable growth and ensuring long-term economic stability.

Progress

SAAFF CEO Dr Juanita Maree

The SAAFF said that from a logistics point of view, progress is evident.

She said that growing political maturity and policy reforms are “unlocking new opportunities, opening the way for some of the national institutions to deliver improved operational performance.”

The National Logistics Crisis Committee (NLCC) was established in June 2023 by the government to attempt to address the country’s transport and logistics crisis by implementing swift and innovative solutions for supply chain challenges.

Importantly, the Presidency renewed its mandate the NLCC’s for 2025.

“This in itself illustrates the crisis in logistics continues, emphasising the need for sustained focus on finding solutions through public-private consultation and government’s commitment to strategic cross-sector collaboration,” said Maree.

“The extended period in mission for the NLCC also serves in recognition of the tangible, good outcomes this collaborative consultative model is delivering to the nation,” she added.

From this, the government introduced a series of reforms to revitalize the ports and rail systems through the strategic freight, rail and logistic roadmap.

In addition, Transnet has focused on the recovery of freight volumes and ensuring financial sustainability.

The government has also investigated creating a legislative environment that will allow for cooperation between public and private sector operators.

Maree said that opening critical projects to private sector participation (PSP) is essential to the transformation.

“The introduction of concessionary opportunities opens the way to new dynamics and funding models, enabling critical projects for PSP, which are fundamental ingredients in the transformation, away from an inefficient monopolised service platform that is holding back progress,” she said.

The introduction of concessionary and third-party opportunities in South Africa’s logistics sector impacts the management of the Pier 2 KZN main port and allows third-party rail operators to bid under the Transnet Network Statement, signed by Minister Barbara Creecy and published at the end of 2024.

However, this came to a temporary halt.

Reforms contained in the National Rail Policy and Economic Regulation of Transport Bill — which include separating rail operations from infrastructure — has meant that Transnet needs to review the process for bringing in private companies.

“Transnet is fully committed to increasing private-sector partnerships on key rail corridors but believes it is necessary to complete the process of bringing the freight-rail ecosystem in line with national policy before taking any further steps to do so,” it said.

Maree emphasised that drafting legal frameworks for third-party agreements is crucial, as the terms will impact the success of these initiatives.

She said that these legal tools are essential for managing concessionary and third-party opportunities vital for job creation, economic growth, and addressing South Africa’s National Development Plan and logistics crisis.

Sticky fingers and going forward

The SAAFF CEO said it is important to learn from the lessons of recent history.

“Lest we fall prey to another man-made disaster, the devastation caused by state capture – a phenomenon fuelled by weak leadership, systemic corruption, propped by a total void of governance, transparency and accountability,” said Maree.

State capture was followed by looting of public funds under the Covid 19-Pandemic blanket, alongside the systemic abuse of well-intended programmes such as Preferential Procurement remain not just matters of concern today, but possibilities for serial behaviour going forward.

Maree emphasises that South Africa’s growth trajectory requires careful management, with no margin for error.

The country must prioritise transparency, expert consultation, and active engagement from both public and private sectors, particularly in critical areas like port management and rail freight restoration.

Maree acknowledges that while the Government of National Unity’s initial period may be over, meaningful progress has been made through collaboration.

Successful policy reform depends on its integrity and effective implementation to achieve desired outcomes, driving economic recovery and the nation’s future.


Read: South Africa’s ‘big year’ starts this week

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