South Africa’s Minister of Finance, Enoch Godongwana, has unveiled a significant investment plan to improve the country’s transport and logistics sectors. Under the 2025 budget, the government has allocated R402 billion for infrastructure projects that will enhance road networks, rail services, and logistics efficiency. The move is aimed at addressing long-standing issues in the sector and boosting economic growth.
A key portion of this budget is directed toward the South African National Roads Agency (SANRAL), which is set to receive R100 billion over the medium term. This funding will ensure that the national road network remains in good condition, facilitating smoother transportation of goods and people across the country. Well-maintained roads are essential for economic activity, particularly for businesses relying on efficient logistics to remain competitive.
Another major recipient of the budget allocation is the Passenger Rail Agency of South Africa (PRASA). The agency has been working to rebuild its infrastructure and improve rail services, particularly for low-income commuters. The government has provisionally allocated an additional R19.2 billion over the medium term to upgrade critical railway signalling systems. These improvements will allow PRASA to increase train frequency in key areas such as Mamelodi, Kwa-Mashu, Motherwell, and Khayelitsha. With the ability to dispatch trains every 10 minutes, the initiative aims to provide affordable, efficient transport for commuters while reducing household transportation costs.
Furthermore, the allocation will support PRASA’s rolling stock renewal programme, which has already delivered 241 new trains. These modern trains will enhance passenger capacity and improve reliability. However, despite these advancements, PRASA has faced challenges in its procurement processes. To address this, management has implemented measures to strengthen the system with support from the National Treasury. The introduction of live audits for major procurement projects is one of the key strategies to mitigate risks and ensure accountability.
While PRASA focuses on improving passenger rail services, Transnet, South Africa’s state-owned freight logistics company, is also undergoing a major recovery plan. Transnet has experienced financial and operational difficulties, with rail volumes declining from 226.3 million tonnes in 2017/18 to 151.7 million tonnes in 2023/24. The decline has been attributed to derailments, inefficiencies, and infrastructure damage. However, recovery efforts are beginning to yield results, with projections indicating that rail volumes will reach 165.4 million tonnes by the end of 2024/25.
Despite these positive developments, Transnet continues to struggle financially. In 2023/24, the company reported a net loss of R7.3 billion, up from R5.1 billion in the previous year. Rising finance costs, driven by increased borrowing and high interest rates, contributed to the losses. Transnet’s total finance costs reached R14.3 billion in 2023/24, adding strain to its already challenged cash flow. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) also declined from R22.8 billion in 2022/23 to R22 billion, as rising operational expenses offset revenue gains.
To stabilise its financial position, Transnet has shifted funds from capital expenditure to debt servicing since 2018. In December 2023, the government provided a R47 billion guarantee, allowing Transnet to refinance maturing debt and secure new funding. However, the government has ruled out additional debt relief or general balance sheet support. Instead, direct investments are being made in critical infrastructure projects, including the expansion of the land-side container terminal in Cape Town.
As borrowing continues to rise, with total debt increasing by R7.6 billion to R137.7 billion between March 2023 and March 2024, effective debt management remains a priority for Transnet. The government’s intervention aims to strengthen the logistics sector while ensuring long-term financial sustainability.
The 2025 budget reflects the government’s commitment to revitalising South Africa’s transport and logistics sectors. With substantial investments in roads, rail infrastructure, and freight logistics, the plan is expected to improve efficiency, support economic growth, and enhance the quality of transport services for citizens.
