South Africa’s rail revitalisation a ‘model’ for future African development

The initiative marks a significant shift towards a public-private partnership (PPP) model, aimed at revitalising the country’s logistics backbone and addressing long-standing inefficiencies.

Transport minister Barbara Creecy confirmed that while private operators will be granted access to the network, ownership of the infrastructure will remain firmly in the hands of the state.

Funding sources for the railway rejuvenation will include Transnet’s existing infrastructure budget; two applications to National Treasury’s Budget Facility for Infrastructure (BFI) of R16.4 billion (approx. US$924.960 million) submitted in July and R18.6 billion to be submitted in October; and a joint funding framework with current customers.

Jason Smit, an expert in infrastructure at Pinsent Masons, said: “Transnet, South Africa’s state-owned railway entity, will begin the formal procurement process by the end of 2025, which is likely to be followed by a concessioning model for private sector involvement. However, this would need to be a hybrid concession, deviating from traditional Build-Operate-Transfer (BOT) or Design-Build-Operate (DBO) models.”

“This development reflects the shift towards a PPP model, which was discussed during the DEVAC Infrastructure Summit earlier this year, at which I participated in a panel that explored how modernising rail networks, improving road infrastructure, upgrading ports and implementing key projects can drive economic growth in Africa,” he said.

The reform is aligned with the SADC Regional Rail Master Plan and the African Integrated Railway Network, and can been seen as a model for other African countries.

Of the 25 current train operating companies in South Africa, 11 have been approved for the next negotiation phase, with Grindrod Limited and Menar already confirmed as successful applicants. The finalised list hasn’t yet been made public.

The Road Freight Association has endorsed the project, calling it a “historic and necessary step” for logistics efficiency that emphasises the importance of integrated rail-road freight systems.

Thabiso Mthembu of Pinsent Masons said: “Challenges in maintaining South Africa’s rail infrastructure have led to the implementation of the PPP model, which appears to have support from government, the private sector and industry.”

“South Africa’s rail reform is more than a national undertaking it is a continental opportunity. If executed effectively, it could serve as a blueprint for infrastructure development across Africa, fostering collaboration in infrastructure investment,” he said.