OPINION | South Africa's recovery will be limited without investment in maintaining rail sector

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Supplied by Bombardier.
Supplied by Bombardier.
The country's railway networks need to be maintained in order to get the country moving and help grow the economy, writes Tomas Badholm.

To facilitate the reopening of the South African economy and to kick-start the economic revival post Covid-19, government needs to prioritise investments in the maintenance of rail infrastructure including rolling stock.

Globally, the railway sector has experienced severe revenue losses amid the global coronavirus pandemic. Many governments have responded with financial support, given the need to fast-track the recovery process.

South Africa should take a similar approach. While there is a need to expand its transport networks, the country's immediate priority should be to invest in the maintenance of its existing rail infrastructure to facilitate a strong economic recovery.

Rolling stock is the most maintenance-intensive component of any railway system and both freight and passenger fleets are prone to breakdowns in the absence of regular maintenance. Ultimately, breakdowns result in higher overall costs and lower revenues. For South Africa's rail systems to operate effectively and at full capacity, maintenance should be a continuous priority. Efficient rail services would enable commuter mobility and boost South Africa's competitiveness in the global trade arena.

However, maintenance has been insufficient in recent years, and the consequences are already evident in South Africa. This could translate into a serious drag on the economy. As a result, we believe that the economic recovery plan that is currently being finalised by government, the private sector and other stakeholders needs to include targeted investments for the rehabilitation of the rail sector.

Doing so would provide individuals with better access to employment opportunities, while the country's exporters would be able to grow their revenues and bolster the country's current account.

South Africa is underinvesting in maintenance

In 2010, maintenance accounted for 12% of the Passenger Rail Agency of South Africa’s (Prasa) total costs. However, by 2017, that figure had slipped to just 3%. Meanwhile, San Francisco’s Bay Area Rapid Transport system, which operates a similarly aged fleet, has maintenance costs worth 10% of total costs.

South Africa's underinvestment in maintenance explains the high level of breakdowns and decline in fare revenues of rail operators. This comes at a heavy cost to millions of individuals who rely on public transport. Finally, continuous maintenance costs the public less than the higher insurance premiums and restoration costs associated with neglected infrastructure.

However, the immense investment needed for rail maintenance and repairs on an entire train or rail system remains a big challenge for operators, resulting in them being less inclined to make such a vast investment. This can be approached with the solution of allowing for upkeep only on specific parts or sections of trains and rail systems, to get these parts to function and operate as it should. This will, in turn, develop confidence in service levels the customer expects, driving trust and commitment to investment in rail maintenance and repairs on an ongoing basis.  

The much-needed road-to-rail shift

The suboptimal state of South Africa's rail fleets partly explains why many exporters are forced to move goods via road networks - an inefficient alternative to rail when aiming to satisfy global demand.

The much-needed road-to-rail shift will only materialise when South Africa's freight rail networks are working optimally. This would reduce the cost of doing business, promote international trade, reignite economic growth, and mitigate the impact of climate change given that rail transport is less carbon-intensive than road transport which currently accounts for 70% of land freight.

According to National Treasury’s economic growth plan, we need to draw on private-sector resources and expertise to develop and improve South Africa's rail networks.

Bombardier Transportation is keen to play its part. The global transportation group has been delivering services and maintenance for passenger trains and locomotives produced by itself and other manufacturers across the globe. Based on its successful services and maintenance contract for the Gautrain, one of the most advanced rail projects in Africa, Bombardier has the local expertise and experience to take on similar maintenance contracts for both passenger trains and locomotives irrespective of the manufacturer.

To lift passenger numbers and improve the country's trade prospects, there is an urgent need to normalise maintenance practices across the rail sector. This includes raising maintenance budgets and entering into third-party contracts where product warranties have expired. Optimal freight and passenger movement is a prerequisite to efficiencies, cost reductions, and sustainable economic growth.

Lifting growth and creating jobs

Treasury's economic growth plan show that a 30% decline in the cost of transport, logistics, and communication, coupled with a doubling of foreign investment, could raise GDP growth by 1.2 percentage points and create 620 000 jobs in a decade.

In early February, President Cyril Ramaphosa said in his State of the Nation Address that the government's priority list for 2020 includes plans "to fix commuter rail, which is vital to the economy and to the quality of life of our people". We cannot agree more.

While these plans have undoubtedly been disrupted by the Covid-19 crisis, we would urge authorities to prioritise the efficient running of the country's rail networks. The maintenance and development of all infrastructure should spearhead South Africa's economic recovery and job-creation efforts. We urge government to prioritise high-impact segments such as rail if it is serious about moving the economic recovery needle in the months and years to come. 

- Tomas Badholm, Projects, Sub-Sahara Africa region at Bombardier Transportation.

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