Africa’s biggest freight rail market set for private operators

Africa’s biggest freight rail market is on the cusp of being transformed by private operators, the head of the operator of the continent’s largest rolling-stock fleet said.

The South African government is about to publish a so-called rail network statement that will propose rules for private rail participation in the hitherto state-run and operated sector, said James Holley, chief executive officer of Johannesburg-based Traxtion Africa on Tuesday. Those rules will be set after public consultation.

“We are all standing on the edge of the precipice. We’ve got to take the step,” Holley said at an infrastructure conference organized by Ninety One Plc in Johannesburg. “And that starts with the network statement in April.”

The document is part of a broad plan spearheaded by the office of South African President Cyril Ramaphosa to fix the country’s struggling ports and rail system. Its aim is to boost private participation in the industry, which until now has been run by state logistics monopoly Transnet SOC Ltd.

That monopoly has been plagued by years of mismanagement and corruption scandals resulting in the ports being some of the world’s least efficient, and coal and iron railings to ports falling to multidecade lows.

Over the past five years the amount of goods and commodities transported by the state-run freight rail system has plunged to about 150 million tons from 226 million tons, the government said in the plan, the Freight Logistics Roadmap. Miners, desperate to get their goods to ports, have resorted to trucks, damaging national roads.

That, and the fact that at 23,000 kilometers (14,300 miles) South Africa accounts for 85% of Africa’s rail network, is an opportunity for private operators, said Holley. While the network needs to be upgraded, that’s cheaper than building new lines, he said.

‘Next Frontier’

South Africa’s rail demand is based on the continent’s biggest coal, iron ore, chrome and manganese industries as well as a busy container line that runs between the country’s biggest port, Durban, and its commercial hub of Johannesburg.

Traxtion currently runs its business across eight African countries from South Africa. It’s main shareholders are Principle Capital and Harith General Partners Ltd.

“We’ve grown rapidly over last four years because of regional reforms,” Holley said. “The next frontier is this great leap into the biggest freight network.”