South Africa’s rail sector is moving from diagnosis to delivery. The challenges are well documented. They include a shortage of operational trains, ageing infrastructure, widespread theft and vandalism, and operational inefficiencies. These bottlenecks spill into ports, slowing trade. Additionally, shifting trade routes, geopolitical instability and environmental concerns add further complexity.
Yet opportunities are emerging as the African Continental Free Trade Area takes effect. The United Nations’ Economic Commission for Africa projects a 50 per cent increase in intra-African transport demand and a 28 per cent rise in freight demand by 2030.
Efficient movement of people and cargo across the continent will be critical for economic growth. In this context, the rail sector on track will play a key role in supporting that growth.
Rail on the move
In contrast to last year’s audit of constraints, significant progress can be reported this Transport Month. The rail network sits at the centre of reform. With evolving policy, active industry involvement and increased access to capital, the focus has shifted to disciplined execution. The goal is to deliver reliable passenger and cargo services.
The policy direction was set in 2020 under the Economic Reconstruction and Recovery Plan. At that time, the government committed to enabling third-party access to the core rail network. The National Rail Policy, issued in 2022, mapped out priorities. These included creating a national Rail Planning Function tasked with developing an integrated Rail Master Plan.
Other priorities focused on promoting third-party access through a Private Sector Participation framework, introducing independent economic regulation of rail access and shifting passenger demand from road to rail. Together, these measures ensure the rail sector is on track to align with long-term economic objectives.
Further momentum came with South Africa’s signature to the Luxembourg Rail Protocol in March 2022. The country subsequently ratified it in January 2025, and it will take effect from May 2025, pending domestication. Accordingly, the protocol supplements the Cape Town Convention by creating a global registry for security interests in railway rolling stock.
It strengthens cross-border creditor and lessor rights. Practically, this reduces legal uncertainty and enables financing for the PSP pipeline. Consequently, the rail sector remains on track for private-sector investment.
Investor interests
Policy advanced again in December 2024 with the enactment of the Economic Regulation of Transport Act. Its phased commencement, effective from April 2025, establishes a single Transport Economic Regulator. This regulator will ensure fair and nondiscriminatory access and pricing across rail, ports, roads and airports. In parallel, Transnet’s infrastructure manager released the final Network Statement. This document outlines the operating rules and tariff methodology supporting open access to the rail network.
Planning moved to market engagement in March 2025 when the Department of Transport issued a Request for Information. This tested investor appetite for PSP across rail and port projects. The process closed with 162 formal submissions, signalling strong investor interest.
By August 2025, the concept turned to allocation. Eleven of 25 applicants qualified for slots across 41 routes. Transnet’s remaining haulage capacity will be augmented rather than displaced.
Around the same time, the Export Credit Insurance Corporation of South Africa announced that once the Luxembourg Rail Protocol is in force in the debtor’s state, it will discount its risk premium by up to 20 per cent for rolling stock finance. Subject to South African content and compliance requirements, this will make rail financing more attractive for all PSP participants.
Early signs of recovery
Early signs of recovery are evident. Transnet reported a 10.7 per cent increase in port container handling. Rail reliability has also improved modestly by mid-2025. On the passenger side, PRASA is restoring priority corridors, improving safety and rebuilding reliability.
About 35 of 40 corridors are back in service to some degree, including Cape Town’s Central Line. Further engagement for PSP participation is expected. Together, these improvements show that the rail sector is on track to begin delivering tangible results.
South Africa’s rail sector has turned a corner. The critical challenge now is disciplined execution. The focus must be on turning plans into contracts and contracts into continuous improvement. If achieved, the rail sector can shift from being a constraint to a catalyst for growth.
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| Vivien Chaplin | Director | Corporate & Commercial Practice | mail me | | Haafizah Khota | Senior Associate | Corporate & Commercial Practice | mail me | |
| | Cliffe Dekker Hofmeyr Inc (CDH) | | |
