In an effort to strengthen South Africa’s position as an attractive investment destination, Transnet sponsored the fifth South Africa Investment Conference 2023 in Johannesburg.
More than 1000 delegates from various industries in South Africa and around the world attended the conference.
The theme of the conference was “Accelerating Economic Growth by Building Partnerships”.
Transnet is South Africa’s state-owned logistics infrastructure company responsible for the port, rail and pipeline network aims to increase direct investment and foster partnerships with the private sector.
Transnet’s participation at the event was opened by the Group CEO, Portia Derby, who participated in the SAIC Breakaway Session entitled: “Infrastructure: Investment Opportunities in South Africa”.
Derby affirmed that Transnet will actively work with the South African government and other stakeholders to revitalise the South African economy through infrastructure investment.
The Minister of Public Works and Infrastructure, Sihle Zikalala, agreed and stated that the six South African border ports would be upgraded to One Stop Border Post standards to promote trade and tourism between South Africa and its neighbours.
Derby added that the state-owned company was looking into private partnerships – including joint ventures and special purpose vehicles.
Derby said Transnet’s stance was aimed at supporting economic activity in South Africa and sub-Saharan Africa.
In this context, Transnet has issued a tender for private sector participation in the Durban Pier 2 and Ngqura Container Terminals (DCT2 and NCT) in 2021.
NCT is located at the Port of Ngqura in the Eastern Cape and serves as a transhipment port for traffic from the east and west coasts of Africa, as well as traffic from South America to Asia. Transnet has shortlisted four companies for the NCT and ten companies for Durban Pier 2.
The intention is to establish a 25-year special purpose vehicle (SPV) between Transnet Port Terminals (TPT) and the winning bidders so that there is no divestment or sale of the facility. After 25 years, the terminals would revert fully to TPT.
Transnet has also put out a tender in the market to find parties interested in entering into a lease agreement with Transnet Freight Rail (TFR) for the operation and maintenance of the container corridor (the route between Johannesburg and Durban) for a period of 20 years.
The 670 km long main line of the container corridor is a fully electrified, double-track railway line from KwaZulu-Natal to Gauteng.
Improving port efficiency will support South Africa’s competitiveness and our ability to create manufacturing and export jobs.
Regional expansion
On the sidelines of the conference, Transnet also outlined plans to work with the private sector to transport raw materials and goods efficiently and at the lowest possible cost from South Africa and SADC.
Yolisa Kani, Transnet’s Chief Business Development Officer, said Transnet is targeting new growth areas in Africa.
As a result, Transnet has developed a regional strategic growth programme to support the AfCFTA (African Free Continental Trade Area) model of cross-border cooperation, aimed at increasing intra-African trade, especially trade in value-added products.
Transnet has three joint operations centres in Zambia, Mozambique, and Zimbabwe, as well as satellite offices in Lesotho, Namibia, and Swaziland.
Transnet is eyeing further growth opportunities in Benin, the Democratic Republic of Congo and Nigeria.
Kani said the expansion is part of Transnet’s integrated regional freight system to ensure that the entire logistics value chain benefits from greater efficiency, improved reliability, and lower costs in intra-African trade.
“Transnet is open for business both domestically and in the region,” Kani concluded.
Investing in capacity expansion from SA
As part of its commitment to remove bottlenecks at our ports, Transnet aims to create inclusive and sustainable growth through infrastructure investments at the Port of Durban and the Port of Richards Bay.
Transnet National Ports Authority (TNPA) portfolio director for Kwa-Zulu Natal (KZN), Dr Brigette Gasa-Toboti, said the infrastructure investments will enable Transnet to increase its contribution to GDP.
Transnet plans to invest R160 billion in the KZN Logistics Hub programme.
“We will create jobs and change the face of society through a programme of this magnitude,” Dr Gasa-Toboti said on the sidelines of SAIC.
The KZN Logistics Hub programme aims to position the Port of Durban as an international container hub that will have an increased container capacity of 11.4 million TEUs (currently 2.9 million TEUs) and an automotive capacity of over 1.1 million units (currently 540 000).
The Port of Richards Bay will be positioned as a dry bulk transhipment hub. It will have a new berth for handling liquefied natural gas (LNG) – a clean alternative to coal for power generation.
The KZN Logistics Hub is expected to create 491,000 jobs in Durban through the major infrastructure developments but will also derive 92,000 full-time jobs from the Port of Richards Bay.
“We need to recognise that infrastructure investments are the foundation for economic growth. They also guarantee inclusivity in that sustainable economic growth,” Dr Gasa-Toboti concluded.
Infrastructure funding
Derby added that there is a need to discuss with the South African government how investments can be used to improve the competitiveness of South African exports.
“We have also done a great job of working with the IDC (Industrial Development Corporation of SA) and the DBSA (Development Bank of Southern Africa) to open up the relationship with the AfDB (African Development Bank) not only for investment on the continent but also for many of the projects that we do in South Africa,” she said.
Derby also called for new sources of funding such as stokvels, to be used to finance South Africa’s infrastructure projects.
Derby said the country needs to diversify its sources of funding.
“Stokvels are a huge black industry owned by our families and the working class. The stokvels have money that is constantly in circulation, but we have never been able to harvest that money,” Derby told the SAIC session titled: “Infrastructure: investment opportunities in South Africa.”
In 2022, there were about 810 000 stokvels registered in the Nasasa database.
With 11.4 million members in 2022, these savings schemes are estimated to have a total value of over R45 billion a year and are growing in popularity among South Africans.
Derby said, “I think not harvesting the stokvel money is a challenge for all of us, because if we really want to have democratic ownership of the infrastructure projects that we create in our society, we have to give ordinary people the opportunity to participate.”
The SAIC was a great success as South Africa has received R1.5 trillion in investment pledges over the last five years, which is 26 percent more than the R1.2 trillion target.
South African President Cyril Ramaphosa concluded the conference by issuing a target of attracting R2 trillion in new investment over the next five years.
