11 February 2021 – Independent railway industry body the RailRoad Association (RRA) has positioned itself to revitalise the African rail sector.
Independent railway industry body the RailRoad Association (RRA) has rebranded itself as the African Rail Industry Association (ARIA) as it positions itself to play a greater role in revitalising the local and continental rail sector and supporting the new African Continental Free Trade Area (AfCFTA).
The AfCFTA, which came into effect on 1 January 2021, brings together more than 50 economies, from Algeria to South Africa. It aims to boost intra-African trade by 60% by 2034, creating a potential economic bloc of USD3.4-trillion.
“A thriving rail sector will play a key role in achieving AfCFTA’s goals”, says ARIA CEO Mesela Nhlapo. “However, while there has been significant investment in Africa’s rail infrastructure in recent years, state-owned rail companies, industry and the private sector are going to have to work together to make the industry more relevant and tap into rail’s ability to unlock economic growth.”
Nhlapo says that South African President Cyril Ramaphosa’s announcement last year that South Africa’s rail network would be opened to third-party operators was a ‘major step forward’ for the industry and could lead the way for the rest of the continent while creating thousands of jobs and driving significant economic benefits.
Granting third-party access to the core rail network within the next 12 months is a key element of the Economic Recovery Plan presented by President Ramaphosa on 15 October 2020. Under this policy, private freight rail operators will be allowed to operate on the state-owned rail infrastructure alongside Transnet. Open access will be complementary to Transnet who stands to benefit significantly from new revenue streams.
Nhlapo said that opening the rail network to third-party operators would unlock ‘billions’ of rands in industry investments almost immediately.
“South Africa and Africa’s state-owned rail companies have a vital role to play as enablers of growth in national economies. By opening their networks to third parties – like freight companies, industries, and independent operators – while retaining the operational aspects of their networks, they will not only become more profitable and sustainable freight railway businesses but enable a range of knock-on effects upstream and downstream,” says Nhlapo.
Currently, most state-owned rail companies in Africa commonly own both the infrastructure (the permanent railway) and the assets that operate on this infrastructure (the locomotives and rolling stock). As long as there is a shortage of trainsets, a capital shortage to invest in these trainsets, or no investment appetite for a particular cargo, this infrastructure remains underutilised, resulting in lost revenue opportunities.
To stimulate greater usage of, and investment in, the country and the continent’s rail infrastructure, a few key elements need to be put in place, starting with regulatory stability and user-friendly access agreement regimes. There will also have to be some work done to create clear and thorough safety regulations, which will attract the kind of quality operators that the infrastructure owners should demand. The role of ARIA, as an advocacy group, is to have the rail industry’s opinions heard and concerns heeded.
The African Rail Industry Association (ARIA), formerly The Rail Road Association of South Africa (RRA), is the pre-eminent body in South Africa representing the players in the railway industry. ARIA represents companies that are Original Equipment Manufacturers, rail operators, or rail services companies in the rail sector associated industries. ARIA is a fully-fledged export council acknowledged and supported by the Department of Trade, Industry and Competition. ARIA is open to strategic partnerships that will help forge a path for a greater and connected African Rail Network.