In announcing Transnet’s 2016 financial results, chief executive Siyabonga Gama dropped a couple of hints. His corporation is making the right inroads, just as electricity utility Eskom demonstrated with its foray into Uganda years ago. He was no longer focusing on what was being done in South Africa, but in Kenya and Nigeria, too.
The noise around the political morass in South Africa’s governing party, combined with the credit rating downgrades by Fitch, S&P and Moody’s and the International Monetary Fund’s warning that Africa’s economic outlook is at its lowest in 20 years, tends to mask what we, the Afro-optimists, have always known: Africa’s solutions lie inside itself.
If South Africa, the leading economy, is in recession and the World Bank still plots its best economic growth prospects at 0.6%, and we sit on a continent with a $100billion infrastructure backlog, it is encouraging that Transnet will be investing about R229bn over the next seven years, according to Gama. On the back of its 1.7% growth in revenue, thanks to the 4.2% increase in rail cargo and to restricting the rise in costs by 1% to R39.9 bon, Transnet clocked what could be called a pedestrian 2.6% uptick in earnings before interest, taxation, depreciation and amortisation. However, in an atmosphere of embattled state-owned enterprises in South Africa, not even the alleged seepage of billions from the corporation, à la Gupta-risation, should shift our attention from the crucial bigger- picture, long-term promise of regional integration.
The muck of corruption and state capture allegations will not last forever. When the clouds eventually lift and governance is restored, Africa will still need a South Africa that can sustain its significance as the gateway to the southern African region.
The 300 million-plus people in the Southern African Development Community (SADC) remain a key market for African goods and services. Currently, intra-Africa trade is estimated at less than 15% of Africa’s total trade.
It can only grow if the 54 countries of Africa can trade with one another. This is not possible without a sound rail and port infrastructure, off which roads and airports feed.
Development finance institutions and other investors, led by the African Development Bank (AfDB), the Industrial Development (IDC), the Public Investment Corporation (PIC), and to some extent the Development Bank of Southern Africa (DBSA), have deployed billions of dollars in critical infrastructure projects. These include intra-country pioneering work, like the Gautrain high-speed rail link between Johannesburg, Pretoria and the OR Tambo International Airport, the Maputo Corridor Logistics Initiative between South Africa and Mozambique, the one-stop Chirundu Border Post linking Zimbabwe and Zambia, etc.
When Gama reported during his results’ roadshow that Transnet was now collaborating with Kenya to run a port in Lamu and is working on another project in Nigeria, he lifted the game to where it long should have been.
Kenya and Nigeria are critical members of the Sub-Saharan African economic landscape. Lamu, in particular, is intended to ease the logjam at another port in Kenya, Mombasa. Creating an alternate route to and from sea in Kenya is more than a Kenyan priority. It connects four countries within the East African Community with Ethiopia, the Democratic Republic of Congo, Sudan and South Sudan. That adds up to a market of more than 300 million people. Nigeria, in the west, is the hub of a regional economic bloc comprised of at least 15 countries. Transnet, therefore, is finally doing what must be done. It must be applauded.
* Author of Africa is Open for Business; media commentator and public speaker on African business, and a weekly columnist for Sunday Independent - Twitter handle: @VictorAfrica