MAZWI BLOSE | The capture of South Africa’s rail system

The announcement that 11 private companies will soon operate on South Africa’s rail network by the Minister of Transport Barbara Creecy has been presented as a reform milestone.

For the first time, privately owned operators have been awarded slots across 41 routes and six major freight corridors, in what the government calls a strategy to boost efficiency and economic growth.

Behind the language of modernisation, however, lies a very different story of the long, deliberate hollowing out of Transnet, once a pillar of South Africa’s developmental aspirations.

What is now described as “reform” is better understood as the final act in a process of state capture, one that replaces a public utility with a fragmented, profit-driven system that threatens to reverse decades of progress toward a developmental state.

Rail has been central to South Africa’s economic history. It was the railway system that enabled the late-19th-century mining boom, moving coal and gold from inland shafts to coastal ports.

Entire towns and industrial hubs - Johannesburg, Witbank, and Richards Bay - were shaped around rail corridors. Under apartheid, rail was harnessed to the priorities of capital and the white minority state ensuring cheap mineral exports, supplying industrial centres, and neglecting rural and Black-majority areas.

Yet even in this distorted form, rail was acknowledged as a strategic national asset. Post-1994, the democratic government inherited Transnet with a mandate to reconfigure it for inclusive development.

Rail would lower logistics costs, strengthen industrial policy, and integrate South Africa’s fragmented spatial economy.

That vision collapsed under the weight of mismanagement, sabotage, and corruption. Freight volumes fell from 226 million tonnes in 2017/18 to around 152 million tonnes in 2023/24. The causes are cable theft, locomotive shortages, vandalism, and port bottlenecks, however, the deeper story lies in governance failures.

Between 2014 and 2016, Transnet signed contracts worth over R50 billion to procure 1,064 locomotives. Investigations revealed that hundreds of millions in kickbacks flowed to Gupta-linked companies, while locomotives delivered were often unfit for purpose.

Transnet remains saddled with debt from these inflated deals, with many locomotives lying idle. By 2024, Transnet’s debt had ballooned to over R121 billion, forcing governmentto provide guarantees worth R149 billion, on top of loans from the African Development Bank and commercial lenders.

Durban and Cape Town, once among Africa’s busiest ports, have become notorious for congestion and delays such that shipping companies have rerouted to Walvis Bay or Maputo, undermining South Africa’ trade competitiveness.

These failures are directly tied to underinvestment and compromised management. The cumulative effect has been to weaken Transnet’s operational capacity while eroding public confidence, laying the groundwork for privatisation advocates to argue that the state can no longer manage rail.

The new slot allocation system allows private companies to operate on Transnet’s rail lines under time-bound agreements, paying fees for access. While the state formally retains ownership of infrastructure, in practice this model entrenches dependence on private operators.

Once corporations secure profitable corridors such as coal to Richards Bay, iron ore to Saldanha, and containers from Gauteng to Durban, the likelihood of Transnet reclaiming those routes diminishes.

The system fragments what was designed to be an integrated public utility, leaving Transnetwith unprofitable lines while private actors harvest revenue from the most lucrative sectors.

This is a familiar pattern globally. In the United Kingdom, rail privatisation in the 1990s promised efficiency but produced some of the highest fares in Europe, chronic delays, and costly public bailouts when private operators collapsed.

In Latin America, rail privatisation during the 1990s led to a sharp decline in passenger services, as private operators abandoned routes deemed unprofitable, leaving vast rural regions disconnected. Once public systems were dismantled, reintegration proved politically and financially impossible. South Africa now risks replicating these failures.

Privatisation undermines the core developmental goals envisioned after 1994. Rail was meant to be a lever for industrialisation and spatial integration, ensuring that logistics served broad economic needs rather than narrow profit.

By ceding operational control, the state loses a key instrument of industrialpolicy, particularly within mining, agriculture and manufacturing.

The model also entrenches a skewed burden-sharing arrangement where the state continues to finance infrastructure maintenance and service debts, while private firms focus on profitable corridors. In essence, risk remains with the state and taxpayer, while profits are privatised.

The opening of South Africa’s rail network to private operators may ease immediate bottlenecks for mining and logistics firms, but the long-term consequences are profound. A system that took more than a century to build, and that was meant to serve as a cornerstone of economic transformation post democracy, is being reshaped into a platform for private accumulation.

History shows how difficult it is to reverse such a shift, as once public rail systems are fragmented, reintegration requires extraordinary political will and financial resources. South Africa now stands at a crossroads to either reinvest in rail as a public good, rebuild state capacity, and address corruption at its root, or follow the well-worn path of privatisation, where short-term gains for capital are purchased at the cost of long-term developmental sovereignty.

Mazwi Blose is an EFF Member of Parliament.