Agriculture remains the doyen of the South African economy despite its minuscule official contribution to the gross domestic product (GDP) which was 3.57% in 2022, equating to approximately R134 billion.
The agricultural sector continues to punch above its weight in terms of its contribution to the ailing economy in the country. To illustrate this point, while total GDP grew by 0.6%, quarter-on-quarter agricultural GDP grew by 4.2% over the same period, making it the fastest-growing sector of the South African economy.
One of the reasons why South Africa has been thriving for years is the fact that the sector is well-developed and has had a strong research and development foundation that enjoyed substantial public sector investment, which spawned the Agricultural Research Council, among others.
The other enabling factor has been a functional logistics networks including properly maintained roads, a functional railway network and harbours (ports).
However, recently there has been an unprecedented deterioration in the road infrastructure in South Africa that is throttling economic development, and agriculture is feeling the brunt of the situation.
Moreover, the roads in South Africa are congested, particularly with heavy haulage trucks that are exacerbating the poor conditions of the roads riddled with potholes and general disrepair. As if the appalling road conditions are not enough, the railway system, particularly for goods, has all but collapsed.
The South African rail freight sector is currently facing a crisis of operational inefficiency which has a significant economic impact, although there are no encouraging attempts to get it to work again – at least an acknowledgement that there is problem in the sector.
In agriculture, reduced rail capacity is preventing South Africa from benefiting fully from the rapidly opening African market under the Africa Continental Free Trade Agreement marking Africa a free trade area.
The general freight rail business is experiencing massive operational disruptions, and the associated shift in freight transportation to road transport is causing substantial infrastructure damage to and congestion on South African roads.
Furthermore, it is more expensive to transport goods by road than by rail and it is also less efficient. For example, a survey conducted by Statistics South Africa in 2021 found that only 8% of agricultural goods were transported by rail in South Africa.
Furthermore, studies have shown that it is much cheaper to transport goods by rail compared to road, in the region of between 11% to 44% cheaper. The rate per ton by rail wagon, say from Reitz to Durban, is approximately R255/ton compared to the current road truck rate of approximately R420/ton.
A revitalisation of the freight rail sector would aid the agriculture sector greatly, especially through having grains and other less perishable products transported by rail to the nearest harbour where they can be exported to international markets both in Africa and offshore. However, it’s easier said than done to get goods back on rail in South Africa.
There are several hurdles that need to be manoeuvred for this to be realised. First, substantial recapitalisation is required to revitalise the rail infrastructure that has been neglected for a long time and looted by criminals for scrap metal, copper wires and railway sleepers.
The South African rail network, especially in far-flung areas, has been seriously neglected although the basic infrastructure is still mostly in place. Its revitalisation will require large capital injection, which South Africa can ill-afford now. However, the question is, can South Africa continue to ignore the pivotal role that a functional railway infrastructure could place in shoring up the economy?
The second challenge to overcome in addressing the issue of bringing back freight rail is the malfunctioning Transnet (Spoornet) and its related subsidiaries. The state-owned company, like most others, needs to get its house in order to be able to deliver on this mammoth task. The problem is that turning around state-owned companies and state-owned enterprises is a long and tedious process that does not involve business principles only but must also navigate political polarisation and vested interests.
Third, the trucking business has grown exponentially over time to fill the void created by the absence of a reliable and functioning freight rail sector, and there is bound to be push-back from those owning and benefiting from the trucking business. Could it be that there are also vested interests from the powers that be to maintain the status quo?
Dr Thulasizwe Mkhabela is an independent agricultural researcher and policy analyst, a director and senior researcher at Outcome Mapping; an honorary research fellow at the University of KwaZulu-Natal (UKZN) School of Agriculture, Earth, and Environmental Sciences; and an associate for the Food, Agriculture, and Natural Resources Policy Analysis. [email protected].