President RAMAPHOSA says our country has a great opportunity to produce and export products

Monday, February 5, 2024 – South Africa needs to take up the great opportunities presented by the African Continental Free Trade Area (AfCFTA) by ensuring its products make it from the factory gates onto the ships heading towards their destinations.

President Cyril Ramaphosa believes this should happen with the least possible delay and at the lowest possible cost.

"Last week I launched the first export shipment of goods produced by South African companies destined for other African countries under the preferential trade provisions of the AfCFTA from the Durban port," he said.

"We can expect many more products and many more shipments to follow as South African companies sell South African made goods into the massive African free trade area. Exports to AfCFTA countries already account for nearly a quarter of South Africa’s global exports."

Ramaphosa expected this figure to increase dramatically, adding South African companies have a great opportunity to export their goods to the rest of the African continent.

"For some years the efficiency and competitiveness of our ports and rail network have been in decline. To give our companies the ability to take up these export opportunities we need to fix our logistics architecture.

"Transnet, which operates our ports and freight rail lines, has had to contend with severe challenges, including the effects of state capture, the impact of the Covid-19 pandemic, natural disasters and rising levels of theft and vandalism of its infrastructure."

As a result, said Ramaphosa, the volume of goods transported on the rail network has decreased significantly, forcing more companies to use trucks and causing congestion on the roads.

"Working together with the private sector, we are turning the situation around, guided by the Freight Logistics Roadmap crafted by Transnet, government and social partners. The roadmap outlines a clear set of actions to stabilise and improve Transnet’s performance in the short term and to fundamentally reform the logistics system in the long term."

In his weekly newsletter, Ramaphosa said the government established the national logistics crisis committee to ensure the work receives dedicated attention. Chaired by the Presidency, it brings together all the relevant government departments to drive a coordinated response to the logistics challenges.

"We have also established corridor recovery teams which bring Transnet, the private sector and independent experts together to improve the performance of strategic rail and port corridors.

"This single-minded approach to improving performance is already showing results. For example, the number of ships waiting to berth at the port of Durban, which has experienced severe congestion in recent months, was reduced from more than 60 ships in mid-November to only 12 ships at the end of January."

Ramaphosa said at the port of Cape Town, which is preparing for the important fruit season, Transnet has deployed new leadership and is putting in place several measures to improve its capacity in the short term.

"Seven new cranes, used for moving and stacking containers, were delivered to the port last month, and the number of work shifts is being increased to improve vessel turnaround times. In addition to these short-term measures, the Freight Logistics Roadmap includes far-reaching reforms to modernise our logistics system and enable much greater investment in infrastructure."

The reforms will introduce private sector investment and competition in port and rail operations, improving efficiency and bringing down prices  while ensuring infrastructure remains owned by the state, he said.

"A key milestone in this reform journey will be the implementation of ‘open access’ to the freight rail network, which will allow private rail operators to invest alongside Transnet Freight Rail for the first time.

"Another key step is the introduction of strategic partnerships in container terminals  which will enable new investment to expand port capacity and upgrade equipment. Progress has already been made with the appointment by Transnet of an international container terminal operator for the Durban pier 2 terminal."

Transnet will retain 51% ownership of the terminal and no workers will lose their jobs once the partnership is established, said Ramaphosa.

"The private partner will have full management responsibility for the terminal and will contribute both capital and expertise to improve its performance. 

"The process of reform takes time and there are no quick solutions to the challenges facing Transnet. However, the steps we are taking will not only improve performance in the immediate term, but will also create a truly competitive and efficient system into the future."

The president anticipated this week's Mining Indaba in Cape Town will showcase the enormous potential of the mining industry to drive economic growth and job creation.

"The actions under way to improve the logistics system will help us to unlock this potential, given that mining companies depend on the rail network and ports to compete in global markets."

Judging from the work already under way, Ramaphosa said the government has shown it is possible to overcome the barriers to growth by working together in partnership.

"We are building momentum and have begun to see the results. As more and more of our products leave our shores, whether to the African continent or other parts of the world, more companies will thrive, more investment will be made and more and more jobs will be created."