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Government departments need to align to revive industry – RRA

RAIL’S RIGHTFUL PLACE
The Railroad Association of South Africa works to promote and protect the interests of its members and the rail industry

RAIL’S RIGHTFUL PLACE The Railroad Association of South Africa works to promote and protect the interests of its members and the rail industry

14th June 2019

By: Jessica Oosthuizen

Creamer Media Reporter

     

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There is no alignment in terms of the objectives of the local rail industry, and the country lacks a united vision, says the Railroad Association of South Africa (RRA) CEO Mesela Nhlapo.

Currently, the visions of the different government departments are not aligning, which leads to policies being disregarded to the further detriment of the rail industry and the country. Moreover, there is a silo mentality in the industry, she says.

“Companies work in silos and compete against one another – there is no unity in terms of what our objectives are as an industry. There is a need to stop working in silos, come together and address some of the major challenges facing the industry.”

The RRA would like to see collaboration between the Department of Trade and Industry (DTI), the Department of Transport (DoT), the Department of Public Enterprises (DPE) and the National Treasury.

Further, she points out that, currently, there is a major disregard for prevailing government policies by State-owned enterprises (SOEs) and some government departments, such as the policy of local-content designation policy in respect of such entities’ procurement spend.

“What is the point of creating policies, which aim to uplift the country and create jobs, but at the end of the day, when it comes to the implementation stage, nothing is done?” Nhlapo asks.

Owing to the disregard by SOEs of the local-content designation policy, the rail industry now faces a major challenge in meeting localisation requirements.

Nhlapo says this is fuelled by SOEs’ procuring goods from China, exacerbated by the inclusion in some contracts with local companies of an “as and when” clause with regard to this spend.

She explains that the clause indicates that the SOE might, for example, order in increments, say 10% of the goods in the contract at a time. This essentially makes any commitment to localisation moot. Even if the contract includes a clause that the company needs to localise in three years, the company is not able to do this if the SOE orders on an “as and when” basis as the company is not receiving enough capital immediately to ensure it invests in localised capacity.

“Companies cannot be expected to localise if orders are not being confirmed and there are no investments. SOEs, which are supposed to be the implementing agencies and ordering from local companies, are looking for cheaper imports and approaching the DTI to ask for exemptions.”

However, she highlights that the DTI has been “a saving grace for this industry” because they have rejected requests from a number of companies requesting an exemption on local content.

That there are no repercussions for those who do not comply with policies, however, is a huge problem. In this regard, policies need to be “holistic”, with “severe punishment” for noncompliance, and stakeholders should be cognisant of the fact that they will face these consequences, states Nhlapo.

Meanwhile, she notes that there must be an alignment of and collaboration between government and the private sector. Engineering News previously reported that Nhlapo said that the industry has local and international players who can offer “technical, engineering and advisory assistance to overhaul infrastructure”.

Further, she tells Engineering News that, simultaneously, “we are hopeful as an industry that what has gone wrong in the past, will be fixed by the new administration of the country”.

“I think we are well positioned to feed Africa with rolling stock, infrastructure and technology, but we need to ensure that we sustain the country’s manufacturing capacity and there needs to be some drastic changes in terms of our investment in the country if we are going to be an export-led economy.”

Meanwhile, she notes that the RRA wants to ensure that rail has its rightful place as the preferred mode of transport, and that the best interests of South Africa, the environment and the economy are served.

“We are an advocacy group that works to promote and protect the interests of our members and the rail industry. The RRA believes that South Africa could be a leader in the rail sector on the continent,” she highlights.

The RRA has been and is engaging with SOEs Transnet and the Passenger Rail Agency of South Africa, and the DTI, the DoT, the DPE and The Presidency about some of the concerns of and challenges facing the rail industry.

The RRA will also be embarking on rail capacity and capability research to identify gaps that require investment; companies are encouraged to contact the RRA to join as members to build one strong rail voice, Nhlapo concludes.

Edited by Zandile Mavuso
Creamer Media Senior Deputy Editor: Features

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