Minister Sindisiwe Chikunga: Media engagement session with National Press Club

INTRODUCTION

I wish to thank the National Press Club for the opportunity to engage with the members of the Fourth Estate, to share our mandate, and the meaningful contribution the transport sector is making towards our collective economic recovery agenda for our beloved country, and our steadfast endeavours as government, to put an end to the downward social and economic spiral that nature has served us.

We believe, in the critical role the media plays, not only as a conduit for public outreach and awareness, but also as civil society’s platform for government accountability. I support your candid efforts in championing our democratic goals, the resultant benefits that have accrued to our people. I applaud the symbiotic relationship we have and acknowledge the need to further strengthen this critically important relationship we have thus built.

Ladies and gentlemen;

We believe in what President Nelson Mandela said I quote;

“A critical, independent and investigative press is the lifeblood of any democracy. The press must be free from state interference. It must have the economic strength to stand up to the blandishments of government officials. It must have sufficient independence from vested interests to be bold and inquiring without fear or favour. It must enjoy the protection of the constitution, so that it can protect our rights as citizens.”

We truly believe and commend the media post-1994, as a lifeblood that has lived to the ideals of our late former President Nelson Mandela. This invitation shows a positive predisposition towards government and a readiness to partner with us in the building and transformation of our economy. It also coincides with the launch of our October Transport Month, which will be launched in a few hours from now.

According to Stats SA, South Africa’s real gross domestic product (GDP) increased by 2.0% in 2022, a negative growth when compared to an increase of 4.9% in 2021. Our sector however showed resilience and growth amidst the negative growth as Transport, storage, and communication sectors, reported a growth of 8.6% and contributed 0.6 percentage points to the GDP.

These sectors combined contributed an added value of approximately R362.5 billion to our GDP in 2022. It should thus be understood that the sector had contributed an added value of over R300 billion in past years. In 2020, the decrease in value-added business reflects the pandemic year, in which restrictions for operations were applied in the transport sector.

In addition, the latest Stats SA’s GDP results for the first quarter of 2023 show that the transport, storage, and communication industry increased by 1,1%, contributing 0,1 of a percentage points to GDP growth. This is due to the rise in rail freight and rail passenger transport. Land transport, air transport, and transport support services also reported positive growth in economic activities.

In terms of employment, Stats SA’s Quarterly Labour Force Survey reported an increase in employment of two hundred and fifty eighty thousand (258 000) in the first quarter of 2023 following an increase of one hundred and sixty-nine thousand (169 000) in the fourth quarter of 2022. The number of people employed in the transport sector increased by nine hundred and ninety-two thousand (992 000) in the first quarter of 2023 as compared to nine hundred and eighty two thousand (982 000) in the fourth quarter of 2022.

With regards to the provincial economic growth performance, the largest producers such as Gauteng, KwaZulu-Natal, and Western Cape are dominating. the trend is that the larger provincial economies continue to grow at higher rates relative to those with less economic activity.

THE NDP AND GOVERNMENT INFRASTRUCTURE SPENDING

Ladies and gentlemen,

Government’s spending plans are made to focus on achieving the objective of the Medium-Term Strategic Framework (MTSF), which has been derived from the NDP 2030, and supports the aspirations of the National Transport Master Plan (NATMAP) 2050.

Spending plans give effect to the priorities of the NDP 2030 and the government’s MTSF, which outlines programmes that are intended to improve productivity and competitiveness across the economy. The aim of the NDP is to eliminate poverty and reduce inequality by 2030 and it might be known that these goals could be realised by, amongst other means, growing an inclusive economy and promoting exports.

As the South African government, business and labour work towards realising the NDP 2030 vision. Currently, the economy faces several domestic constraints that have remained particularly binding over the medium term. These constraints have included among others: inadequate and unreliable electricity supply, skills constraints, regulatory uncertainty in certain parts of our economy, the concentration of particular markets and the existence of highly untransformed markets that discourage new entrants.

These challenges have also deepened as a result of a deep and structural economic crisis that has progressively worsened over the past few years, greatly exacerbated by the COVID-19 pandemic and in part by historically slow infrastructure build.

To mitigate the negative effects of Covid-19 on the economy, Government developed and continues to implement the Economic Reconstruction and Recovery Plan since October 2020, prioritising infrastructure spending as a critical enabler to speeding up economic growth.

The National Treasury, the Infrastructure Fund and Infrastructure South Africa came up with initiatives to improve the scale, speed and efficiency of infrastructure spending by creating a pipeline of priority projects, doing project appraisal and attracting private-sector participation and financing.

The first 62 priority infrastructure projects were gazetted in 2020 and more than R340bn of funding had been committed from the private sector. An additional 51 top priority infrastructure projects (declared strategically important) with a value of around R595bn and with a funding gap of around R441bn were unveiled in 2021.

Some infrastructure projects have been identified with an investment value of R84.5 billion in the transport sector, telecommunications, as well as water and sanitation. On the other hand, government departments have collaborated with other institutions such as Infrastructure South Africa and the Development Bank of Southern Africa to ensure the delivery of these projects.

In the Transport Sector, our State-Owned Agencies such as ACSA, ATNS, PRASA, SANRAL and others have continued to show commitment to the stated imperative of infrastructure build in order to respond to the clarion call on job creation and easing the costs of travel, while also developing industries in the area of infrastructure development.

For instance, let use the South African National Roads Agency (SANRAL) as an example to show the intense contribution we as the Transport Sector, are making in the economic recovery agenda.

SANRAL support the country’s economic recovery, development and social transformation, primarily by maintaining and creating new jobs and creating opportunities for small, medium and large black- owned enterprises.

SANRAL’S CONTRIBUTION TO ECONOMIC RECOVERY AGENDA

In particular, SANRAL celebrating 25 years of impeccable existence is making a concerted effort to empower designated groups in its business operations by providing opportunities to B-BBEE level 1 and 2 businesses.

SANRAL’s procurement policy requires that 30% of main upgrade projects is ring-fenced for SMMEs, notably youth- and women- owned businesses, many of whom receive their first experience in the construction and engineering sectors by working on SANRAL projects. This 30% sub-contracting policy will go a long way in mainstreaming previously disadvantaged groups into the road construction sector and other sectors in which SANRAL is active.

As a further demonstration of how SANRAL is assisting in the recovery of the country’s economy, last year alone it awarded 320 tenders to the value of R51-billion in the 2022/23, significantly up from the R22-billion of tenders awarded in the preceding year.

The spin-offs from such huge investment in road construction for the economy are incontestable. In addition to the tenders awarded by Sanral's head office and its various regional offices, a further 12 contracts above R750-million each were awarded after the Sanral board reviewed the submissions as part of its oversight role. The total value of these was R28- billion.

Again, in line with SANRAL’s commitment to economic transformation, at least 30% of the contract value of each tender has been subcontracted to small, medium-sized and microenterprises (SMMEs). This effectively ensures that at least R18-billion goes to SMMEs located in the various communities in which the projects will be implemented.

Through these awards the roads agency continues on a positive trajectory to drive economic recovery and it should be seen as part of the broader national effort by government to invest in economic infrastructure. Such significant investments in road infrastructure also enable government, through its national Roads agency, to respond to the triple challenge of poverty, unemployment and inequality across South Africa, as large-scale job creation, skills development and knowledge transfer are key elements of economic development and recovery.

We are also heartened to see SANRAL’s commitment and drive to break down monopolies and ensure meaningful transformation that changes people’s lives for the better. The roads agency has recently elevated transformation into one of its pillars of business operations - over and above roads, mobility, road safety and stakeholder engagement. And we have observed the resistance by some to the roads agency’s transformation efforts. As its shareholder representing government, let me just state for the record that I support SANRAL’s transformation efforts.

Dangerous curves have been ironed out. Unsafe intersections have been redesigned.

However, road freight movement places a serious fiscal burden on government, particularly where heavy vehicle overloading is concerned. The heavy vehicle operators are not paying the appropriate cost of damaging the roads. The environmental impact of road-based freight transport through emissions and cargo spillage is also a concern.

Cross Border Road Regulation

On the other hand, ladies and gentlemen,

We cannot speak of road freight without mention of its governance across our borders as in the facilitation of cross border freight and passenger transportation, a function which has been improving in leaps and bounds for the Cross-Border Road Transport Agency (the C-BRTA), which is also among those of our companies turning 25 years old this year.

The Cross-Border Road Transport Agency (C-BRTA) supports the South African economy by facilitating the seamless movement of goods and passengers across various borders which link South Africa and the neighbouring countries. Through the reduction of operational constraints, regulating market access and issuing permits, the C-BRTA plays a vital role in the socio-economic development of South Africa and the Southern African Development Community (SADC) region.

To achieve ease of cross-border road transportation the C-BRTA has developed an Integrated Cross-Border Management System (CrossEasy) to enhance the required harmonisation programme efforts in the SADC region. This is achievable by providing a common technology platform for the issuing and management of cross-border permits. It will also facilitate seamless cross-border road transport movements and trade flows across border posts and corridors connecting the participating pilot countries.

THE INTEGRATED PUBLIC TRANSPORT NETWORKS (IPTNS): THE BUS RAPID TRANSIT

Chairperson of the National Press Club;

The implementation of the Integrated Public Transport Networks (IPTNs) in the country is central to the functioning of hubs of economic activity as they provide sustainable, affordable and functional transport solutions to urban commuters. By mid-2022, seven cities were already operational:

• MyCiTi in Cape Town, Western Cape.
• Rea Vaya in Johannesburg, Gauteng.
• A Re Yeng (Let’s go) in Pretoria, Gauteng.
• Go George in George, Western Cape.
• Harambee in Ekurhuleni, Gauteng.
• Libhongolethu in Nelson Mandela Bay, Eastern Cape.
• Leeto la Polokwane in Polokwane, Limpopo.

RAIL

As regards to passenger rail, the Passenger Rail Agency of South Africa (PRASA) is on track in restoring passenger rail services and fulfilling its primary mandate to move people. Over the past year, PRASA has gained ground in its efforts to recover the passenger rail network, rebuild passenger rail corridors and move commuters on the new blue modern trains, Isitimela Sabantu.

THE FUTURE & BEYOND

The number of reopened lines and those earmarked for reopening tells the story of solid progress in returning passenger rail to its rightful place as the backbone of public transport. Our commitment to revive the passenger train network is in full gear. 16 corridors have been prioritized for the recovery in this financial year. Plans are underway to fix and modernize the signaling in order to run more trains frequently, especially during peak hours. Contractors in the Western Cape and KwaZulu-Natal are already scheduled to commence work.

Maritime

South Africa is a maritime country defined by the characteristics of its oceans, heritage, international trade patterns and geography and boasts of a significant marine real estate. South Africa derives its maritime interests from its trade and geo-economic structure, its geo-political aspirations and the obligations arising from being a regional power located at the southern tip of Africa. It has a developing maritime transport sector potentially able to contribute substantially to the economy of the country and support the National Development Plan.

The Ports Regulator of South Africa through the tariff application process has allowed The Authority (TNPA) to raise funding of R14 billion in the FY2023/24. It is through this tariff methodology that the Authority must create jobs, improve existing and build new infrastructure to address port inefficiencies.

ACSA provides world-class aviation infrastructure at its airports, and it is driven by the need to comply with high international standards requirements. Over the years, ACSA has invested considerably in the expansion and maintenance of its nine airports across South Africa. In contrast however, other airports are managed by provincial and municipal governments, as well as by private businesses.

Air Transport Contribution on the South African Economy

The air transport sector makes a major contribution to the South African economy, supporting about 472 000 jobs and contributes around R154 billion to the South African GDP.

• Airlines, airport operators, airport on-site enterprises (restaurants and retail), aircraft manufacturers, and air navigation service providers employ 70,000 people.
• Buying goods and services from local suppliers the sector supported another 113,000 jobs.
• The sector is estimated to support a further 48,000 jobs through the wages it pays its employees.
• Foreign tourists arriving by air to South Africa, who spend their money in the local economy, are estimated to support an additional 241,000 jobs.

Conclusion

In conclusion, ladies and gentlemen, we acknowledge that public-sector capacity to implement projects and meet the growing infrastructure need is currently inadequate, thus compelling us to collaborate with the private sector actions to provide efficient and sustainable transport infrastructure.

Public-Private Partnerships (PPPs) have the potential to close the infrastructure gap by leveraging scarce public funding and introducing private-sector technology and innovation and can be leveraged as an effective way to build and implement new transport infrastructure or to renovate, operate, maintain, or manage existing facilities; and can be a beneficial way to solve critical transportation problems.

The Infrastructure Fund will play a pivotal role in enhancing collaboration and attracting private sector investment for infrastructure projects.

Thank you.