Although intra-African trade was currently low compared with other major continents, its growth was inevitable and would require significant investment in transport infrastructure development, such as rail, Transnet CEO Brian Molefe said on Tuesday.
The growth of intra-African trade, which stood at 12% the continent’s overall trade, was key, as African nations would have to look to each other for trade possibilities, while the eurozone crisis persisted.
Despite being the fastest growing continent in the world, achieving a 5% yearly growth rate, Africa’s internal trade was still lower than that of the US, Europe and Asia.
“As Africa continues to grow, intra-African trade is bound to increase and when this happens, more infrastructure will be required. Developing rail is therefore important, as it will facilitate trade among African countries,” Molefe said at the 15th yearly AfricaRail conference held in Johannesburg.
He pointed out that Transnet’s Market Demand Strategy (MDS), announced in April, would position it to provide the infrastructure required for such growth.
The R300-billion capital investment programme was aimed at expanding South Africa’s rail and ports infrastructure over the next seven years, thereby meeting market demand and enabling the shift from road to rail.
Molefe said the aim of the MDS was also to grow Transnet by almost three times its size to position South Africa as a key thermal coal exporter, the fourth-largest supplier of iron-ore to China and make it the biggest global manganese exporter.
Meanwhile, significant anticipated growth in commodities would also spark rail infrastructure development in Africa.
Molefe further told Engineering News Online that other African countries had indicated their willingness to cooperate in developing the country’s railways. However, he emphasised that for such plans to be successful, a strong local base would be required to work from. “We need to fix what is here first,” Molefe noted.
Looking ahead, he expressed concern over the eurozone crisis, but said it could hold opportunity for South Africa.
“Developments in Europe are concerning and it might mean that we will have to turn taps down a bit in terms of funding of the MDS, but the European economic crisis marks opportunity to the extent that it allows us to approach possible rail investors and offer improved major market credit,” Molefe explained.
Further, he said Transnet planned to continue driving the shift from road to rail, by streamlining its operations, as well as by improving efficiency and reliability of rail transport.