No lifeline for Transnet or other ailing parastatals in medium term budget:
Finance Minister Enoch Godongwana on Wednesday put public-private partnerships at the centre of plans to shore up Transnet, holding off for now on fresh capital injections for the debt-ridden logistics group and other struggling state-owned enterprises.
“We will open the freight rail network to private operators to reduce inefficiencies and costs,” Godongwana confirmed in his medium-term budget policy statement (MTBPS).
The minister stressed that effective infrastructure investment is a pillar of the government’s plans to breathe life into the economy and stimulate growth. Much of this depends on the performance of Transnet, which is saddled with debt of R137 billion and woefully incapable of meeting its targets.
“In this regard, we are implementing reforms that will create conditions to attract greater private sector participation,” Godongwana said.
The reforms include mobilising “significant private sector financing and technical expertise to augment the limited public sector capacity and capability”.
The treasury was amending regulations to simplify the requirements for public-private partnership, he added.
“The department of transport, Transnet and the Passenger Rail Agency of South Africa are finalising a list of priority projects that will be issued to the market in 2025.”
Godongwana said the treasury was still quantifying the value of assets Transnet needs to dispose of before considering financial support.
The only cash injection in the medium-term review is a special allocation of R3.2 billion for the South African National Roads Agency, designed to cover debt related to the Gauteng Freeway Improvement Project.
Transnet a year ago appeared to surprise the shareholder when it put out a call to the market for a 20-year lease of its Johannesburg-Durban corridor, but since then scruples about private partnerships have faded.
A fortnight ago, Transport Minister Barbara Creecy told parliament’s standing committee on public accounts (Scopa) that the state had no qualms about considering third party financing, stressing “we are not confused”.
The treasury said on Wednesday that “reforms that open the freight rail network to private operators will reduce inefficiencies and costs, helping firms offer lower prices and boosting economic growth”.
Creecy confirmed that the company has a current capital requirement of between R100 billion and R120 billion.
Transnet’s debt burden carries annual interest repayment obligations of R14 billion. Its total liabilities exceeds its assets by about R60 billion, which recently caused the auditor general to warn that it might not be able to pay its short-term debts as they become due.
It secured a R18.85 billion loan from the Development Bank of Southern Africa in July and in September another of R5 billion from the New Development Bank, the multilateral development bank established by the Brics nations, to support the modernisation of the freight logistics sector.
Creecy noted that Transnet had reached only 28% of its targets in the past financial year and was operating well below industry standards, with ports averaging 20 crane moves an hour as opposed to 25 to 30.
“This results in long waiting times for vessels,” she said, adding that the success of the logistics company was “perhaps the greatest factor in ensuring our economy stabilises”.
The company is also well below its target of shifting 200 million to 220 million tonnes of freight a year, at which point, it is estimated, it will begin to make a meaningful contribution to the economy.
The treasury said on Wednesday the transport, storage and communication sector grew by only one percent in the first six months of the year, in part because of rail inefficiencies and poor port performance.
Citizens also have a responsibility in making African cities liveable:
Cities are complex social systems and, like magnets, they attract and repel. For some citizens the notion of a city conjures up images of bright lights, sophistication, excitement and opportunities. For others, a city is a dystopian, heartless and dangerous place where social ills prevail and threats to life and limb are pervasive. No matter the prevailing views towards cities, for millions of Africans, cities are what we call home. The challenge is, how to make cities more liveable; where they shelter us, nurture us, support us, and even become spaces where dreams are made.
African cities are expanding at a rapid rate. Cairo, Addis Ababa, Kigali and Cape Town are but a few of the cities on the continent that have shown exponential growth spatially, economically and demographically. These are primarily due to rural to urban population shifts, intercity-migration and high birth rates.
Over the next three decades, Africa will experience the fastest increase in the working age population of all regions, with a projected net increase of 740 million people by 2050, according to a recent World Bank in Africa Report (2024). It’s already estimated by the World Bank that by 2025, the population on the African continent will increase to become one fifth of the world and that more than 60% of the population will live in cities by 2050.
Rapid population growth has a huge effect on cities. It forces cities to become resource intensive, resulting in them consuming about 60% to 80% of energy worldwide and thereby producing vast quantities of greenhouse emissions. Yet, on the plus side, cities around the world also generate more than 80% of GDP in countries where they are located, and are often major hubs for socio-economic and technological development.
But cities should be more than just economic hubs. They should also be spaces that nurture temporal living.
Imagine a city whose layout incorporates parks, green belts, and public gardens to improve mental and physical health, reduce urban heat, and support biodiversity. Or, imagine a city whose layout enriches urban life, fosters cultural engagement and makes the city itself feel vibrant through promoting art. There could be art walkways that guide pedestrians through art installations and murals across the city. These can preserve heritage, attract visitors, develop aesthetic appreciation and encourage local exploration.
However, rapid city growth comes at a cost. They experience “boom-bust” phenomena; “boom” when they benefit from available skills and enterprise development, and “bust” when population density overwhelms and places pressure on infrastructure and resources such as water, housing and energy. In such situations the challenges to city planners and local government officials are how to leverage the benefits from the “booms” and how to plan and mitigate the “busts”.
Whether in “boom”, or “bust” phases, cities are integral to a country’s geo-political fabric. And, rapidly growing cities are organic; they form around its citizens and likewise the citizens shape the city. But the key questions remain, Are they liveable and how should African cities transform so that they become liveable? These are complex questions that will evoke multiple and possibly very diverse responses.
A viable starting point is that a livable city should be one that is “rehumanised”. It should be a space where people feel cared for, where there’s a sense of belonging, and where aspirations are nurtured. This must therefore include balanced integration between social, economic and environmental factors to create a place where people enjoy living, feel safe and thrive.
At a practical level, a rehumanised or citizen-centred city should be one where city government and management serve the best interests of its inhabitants. There should be a culture of excellence where basic services and citizen-friendly amenities are prioritised. These can include safe recreational or green spaces that promote social interaction, infrastructure that facilitates economic opportunities, as well as access to health care facilities. In support of these, national and local governments need to prioritise “Batho Pele” (people first) principles and actively address problems such as corruption, incompetence and crime. These exacerbate dysfunction and in some cases promote “crisis shocks”, such as unrest, vandalism and substance abuse.
A liveable city is not a bridge too far. It depends on political will, competent local government and the drive to harness innovative technologies. There are accessible solutions to make cities more liveable. Rapid advancements in digital technology and artificial intelligence can provide effective ways to manage cities and can be harnessed to manage boom-bust phenomena. Enabling technology can include the following:
- The Internet of Things, a digitally connected, or “smart” city where sensors assist with multiple resource management functions, camera technology to better ensure safety on the streets;
- An aerotropolis (airport city) that leverages value from aviation, tourism and multimodal mobility solutions, and
- Green initiatives that will support sustainability.
An example of a green initiative that can promote food security is the 33 metres below London, in an abandoned air raid shelter is the world’s first underground farm. This is a collaboration between private investors and the University of Cambridge (Growing Underground) to revolutionise urban farming.
In the United States the Omega project (Offshore Membrane Enclosures for Growing Algae) is a “sustainable futures” response to increased waste water associated with urban growth. This complex process uses waste water to grow algae which, in turn, can be harvested for biofuel. These are two projects which could be implemented in cities in South Africa.
The creation of a liveable city, a city with soul, is important to the health of a nation. But achieving this is a shared responsibility — the government and the citizens who make up a city. Citizens are not absolved of their roles and should be active participants in making cities liveable. Like Kigali’s clean city image, or Gaborone’s safety record, at a micro level, people need to actively participate in addressing crime, grime and community-based problems.
If all city inhabitants fully embrace their responsibilities, liveability will not be an imaginary concept, but a lived reality.
Rudi Kimmie is the interim director at the University of KwaZulu-Natal’s Aerotropolis Institute Africa. Justin Pringle is a senior lecturer in the School of Civil Engineering and head of Purpose-driven Engineering at UKZN. They write in their personal capacities.
Mid-term budget: Godongwana introduces early retirement plan:
The treasury said on Wednesday that it is re-introducing an early retirement programme to reduce government employment costs.
It will cost R11 billion and this amount will be allocated over the next two fiscal years, with details to be set out in the 2025 budget review in February.
Public servants aged 55 to 59 will be able to apply for early retirement, without a reduction of pension benefits.
Tabling his 2024 medium-term budget policy statement (MTBPS) on Wednesday, Finance Minister Enoch Godongwana said this move will cut government spending on salaries and promote the entry of younger talent into the civil service.
This is not a new initiative; it was initially implemented from 1 April 2019 to 30 September 2019.
In a question and answer session with the media, the treasury said it was targeting a 30 000 uptake, which will result in a R2 billion cost saving a year because people in higher income bands will be replaced by those earning less.
Government employment takes up 18% of total employment in the country, which was 16.7 million in the second quarter of 2024, according to Statistics South Africa.
The treasury said early retirement was a voluntary project but added that it would be up to executive authorities and accounting officers to approve applications so that highly skilled people would be retained.
“We are implementing initiatives like early retirement not to merely reduce the size of the workforce, but also to introduce younger talent to the public service. This is part of building a capable, ethical and developmental government,” Godongwana said in his speech.
The public sector wage bill has weighed heavily on the fiscus for years with attempts of reigning it in proving largely unsuccessful.
In 2019, former finance minister Tito Mboweni introduced a public sector salary freeze for three years in an effort to control the ballooning wages. But, in the 2023-24 financial year, public service wages increased.
Over the past 30 years the public service wage bill has increased as a share of South Africa’s GDP from 5.6% in 1994-95 to 10.4% in 2023. This is a result of the fast-growing average remuneration Of public service employees over the past three decades.
On Wednesday the treasury said that as the demand for services such as healthcare, education and security increased, it put pressure on the limited number of public service workers. This meant the government needed to attract and retain skilled professionals in the public sector by way of higher wages, benefits and allowances.
“Public service remuneration requires a delicate balance between attracting and retaining skilled personnel, ensuring fiscal sustainability and promoting economic growth,” the treasury said.
“It will be essential to implement reforms that align public service compensation with broader economic growth while addressing the pressing issue of growing public service employment.”
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