By: Claire Tucker - Head of Public Law and Regulatory, and Andrew Pike, Head of Ports, Rail and Transport, Bowmans South Africa

Public sector participation (PSP) will intensify in the ports, rail and logistics sectors in 2025. Businesses with expertise in infrastructure, shipping, large container operations, private and commercial rail and supply chain management, for example, will be able to capitalise on opportunities to invest in these sectors. Those operating in the mining and agricultural sectors, which rely heavily on efficient supply chains to move their commodities, are also likely beneficiaries of the PSP programme.

Policy and legal framework – setting the scene for investment in 2025

South Africa's state-owned freight logistics company, Transnet, introduced a PSP framework several years ago to attract sustainable private sector investment and improve the country’s ports, rail and logistics infrastructure. The framework was last updated in late 2023 with the Rail Private Sector Participation Framework and aligns with the National Rail Policy published in 2022.

Also in 2023, the government introduced the Roadmap for the Freight Logistics System in South Africa (Roadmap) to enhance freight rail and port operations by reducing congestion and stabilising Transnet’s financial position. In the long term, the plan focuses on structural reforms to address efficiencies, establishing a funding system for both public and private investments and introducing a single Transport Economic Regulator. The plan also addresses commitments in the National Rail Policy and National Commercial Ports Policy.

The National Logistics Crisis Committee (NLCC) was set up by the government to finalise the development of a PSP unit with expertise in the negotiation and contracting of projects and to oversee urgent interventions in South Africa’s port and rail network. The unit will also oversee longer-term projects, such as opening the port and rail networks to private operators.

The Economic Regulation of Transport Bill, signed into law in early 2024 and aligned with the Roadmap, establishes a single transport economic regulator with statutory powers. The Bill’s aim is to boost private sector investment while maintaining state ownership of infrastructure. This regulator will assume the functions of the existing Ports Regulator and Interim Rail Economic Regulator.

Port developments

In 2024, Transnet announced plans for substantial investments in port infrastructure, aimed at increasing capacity and improving sustainability at South Africa’s ports. The Transnet National Ports Authority (TNPA) detailed a ZAR 13 billion investment over the next five years. Key priorities include developing an automotive hub, liquid bulk facilities, and regional container hubs. An LNG hub and a back-of-port logistics park will also be developed at some of South Africa’s major ports. Private sector involvement in these projects will be crucial in 2025.

Rail improvements

According to a report by Momentum Investments, the cost of rail inefficiencies was 4.9% of GDP in 2023. The priority in 2025 will be to improve and stabilise the country’s freight network operations. The Roadmap includes plans to establish the single transport regulator, which will regulate rail as part of its mandate and grant operational rights to private rail companies. However, Transnet will remain the network owner and manager. The final version of the network statement, which will establish the rules of the game and tariffs, is expected to be published before the end of 2024. Other plans include improving rolling stock through the creation by Transnet of a rolling stock leasing company and network security, with implementation expected in 2025.

Aligned with the Roadmap, the Draft Rail PSP Framework is set to be finalised early in 2025. The framework enables private-sector participation in the railway infrastructure system, with the priority being projects that will fix the rail network infrastructure first. The final network statement and the proposed tariff methodology for third-party access are also set to be implemented in 2025.

Foreign investment framework

Foreign investors interested in capitalising on private sector opportunities in the rail, ports and logistics sectors in 2025 have access to tax incentives and a supportive legal environment. The Promotion and Protection of Investment Act ensures that foreign investors receive the same rights as domestic investors, and recent amendments to the Competition Act align with international trends on national security interests. South Africa’s membership in various international bodies and the African Continental Free Trade Area Investment Protocol further enhance its attractiveness to investors.

Notably, the National Treasury highlighted the importance of public-private partnerships (PPPs) in revitalising the economy when they proposed amendments to Regulation 16 in 2023. These amendments aim to simplify PPP processes, improve contract management, and establish a PPP Advisory Unit to support public sector initiatives. The changes are designed to make public-private partnerships more accessible and appealing to private investors, although the streamlining of processes is still a work in progress.

The country’s Broad-based Black Economic Empowerment (B-BBEE) Act provides additional opportunities for international companies to engage in the local market, promoting economic transformation and reducing income inequalities. Transnet was recently given B-BBEE facilitator status, which means that it can leverage its position to bring in international companies that do not have much experience in B-BBEE. 

Transnet’s PSP programme, which is being actively facilitated by the new Minister of Transport, Barbara Creecy, represents a significant opportunity for private sector investment in South Africa’s rail, port and logistics sectors in 2025, with investors providing the expertise and capital for the country to be able to run at full capacity.