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South Africa: Big Investments, Big Transformation

By all accounts, South Africa’s plan to procure more than 7,200 new rolling stock sets a record as the largest public metro rail procurement program in history. And with a total 20-year projected budget of around US$10 billion, it is likely the largest rail project of any kind underway in the world today.
Yet while the headline numbers may be impressive, more impressive still will be the transformational impact the program will have on the national economy and economic growth and development.

A Growth Imperative

For the country of South Africa and its people, the rolling stock procurement program represents more than just another major project; it represents opportunity. More than 2.2 million people rely on the country’s aging rail network to get to work every day but – with much of the existing rolling stock now almost 60 years old – reliability, speed and capacity have become significant problems, both for users and for the economy.
“Helping people and products get to their destinations quickly, reliably and on time is key to growing a middle-class and creating an attractive and successful business environment,” pointed out Piet Sebola, Group Executive of Strategic Asset Development of Passenger Rail Agency of South Africa (PRASA) and the person responsible for this Procurement Program. “Having people and products sit unproductively for long hours on the roads is simply not good for the economy and won’t help South Africa grow and develop.”

Evaluating the Benefits

Recognizing the wider benefits that improved rail infrastructure could provide, PRASA strives to make investment decisions based on much more than simple financial cost/benefit analysis. Environmental impact, reduction in travel times, improved safety, long-term operating costs, potential for job creation and economic development are also factored into the decision-making process. “Ultimately, it’s about development and improved rail infrastructure that catalyzes development in ways that roads just can’t,” added Mr. Sebola. “Once you start laying out the rail lines and improving the service, people tend to respond by moving their families and businesses closer to the nodes which, in turn, drives significant development and creates massive opportunities for the population.”


Overcoming the Transformation Challenges

PRASA faced a number of challenges in developing such a large and transformational procurement program. In part, this was because South Africa had not made a major procurement of rolling stock in more than 30 years and therefore lacked much of the experience and capacity to develop an achievable plan.
Data and market information were a particular problem. For example, PRASA needed to ensure that the national market contained enough capacity and resources to meet the threshold of at least 65 percent local content that had been set by the Department of Trade and Industry. “The data we needed on the market, its capability and capacity either didn’t exist or wasn’t readily available so we needed to spend some time collecting and analyzing the data to ensure that we could –with authority – say that we could meet or exceed that requirement,” added Mr. Sebola.
Time was another ongoing challenge. Indeed, with about half of all existing rolling stock already out of service and many at the end of their lifespans, PRASA knew it needed to move quickly to avoid serious service disruptions.

“We are building a rail system that will meet the needs of everyone – young or old, poor or rich, white or black – rail does not discriminate against anyone,” noted Mr. Sebola. “At PRASA we’re going to continue to work long and hard to make sure that vision becomes a reality for millions of South Africans.”

Get the full report on this and others by downloading INSIGHT: Who Controls Our Infrastructure?

David Okwara

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