Bidvest has warned that SA’s deteriorating basic infrastructure, characterised by a subpar rail system, poor port efficiencies, and declining water quality and availability, continues to redirect commodity flows to neighbouring countries.
While the change in cargo flows benefited its freight division’s Naval and Manica Group Namibia, the company has called for urgent reform and intervention from both the private and public sectors to improve the ease of doing business in the SA and attract future investment.
In its latest annual report, Bidvest whose diverse interests span cleaning services to used cars and freight management, complained that nearly all bulk commodity volumes handled in terminals in SA arrived by road, limiting efficiency.
This is as bulk minerals benefited from a favourable commodity mix, offsetting the decrease in coal and manganese volumes. For ferrochrome and chrome, improved quantities were recorded, it said.
Emphasising that an estimated 80% of total freight transport was now by road — resulting in damaged roads, accidents, high logistics costs and emissions — Bidvest said “bold and decisive action in a co-ordinated and integrated approach” was needed to drive the required turnaround.
“The state of basic infrastructure across SA remains concerning and is seriously impacting the country’s competitiveness,” Bidvest said. “There are many interventions required across numerous urgent requests to repair and replace critical infrastructure, and key among these is a high-performing rail system, which is the backbone of doing more efficient business in the country.”
Durban, a pivotal hub for the Southern African region, serving as a trade link to the Far East, Middle East, Australasia, South America, North America and Europe, has been bedevilled by poor Transnet service, characterised by incessant bottlenecks and backlogs. Meanwhile, the port of Maputo and other neighbouring ports, such as Walvis Bay, have expanded quickly in recent years to meet the demands of both SA and the region’s expanding economy.
Even though Transnet has made optimistic claims about its turnaround, the rail network and ports comeback is yet to fully materialise.
Bidvest said subsequently, SA’s poor rail performance continued to reroute commodity flows to neighbouring countries, with this redirection of cargo profiting its Freight division’s Naval and Manica Group Namibia.
The Namibian business also recorded increased oil and gas activity, copper concentrate, and fertiliser movements, guaranteeing an exceptional 2024 outcome, Bidvest said.
The JSE-listed group also identified a lack of significant investment, corruption, labour inflation and costs, consumer spending, cyber assaults and extensive weather and climate change as risks to the business, alongside the decaying port and rail system.
It said the hurdles meant an inability to secure a supply of critical goods and services, such as raw materials, energy, water, gas, equipment and spare parts, and other consumables, to deliver on-demand.
The group, chaired by Bonang Mohale, said due to the absence of any upkeep or significant investment in infrastructure, the government needed to actively address the fragile status of numerous SOEs, start development programmes and maintain important facilities and national infrastructure.
At the same time, Bidvest, which is edging closer to disposing of its Bidvest bank unit, said the private sector also needed to make investments to start and expand enterprises and industries.
The Johannesburg-based group said it was participating in the Transport Logistics Council, a forum for corporate and government collaboration, and furthering the work of the National Logistics Crisis Committee.
The group, with a market cap of R99.4bn, is actively seeking opportunities for private-sector participation in ports and rail, particularly terminal lease extensions in Durban, and deploying intervention teams to enhance the operational performance of rail-based supply chains on strategic corridors.
However, the group was confident that the recent momentum created by the GNU would drive infrastructure maintenance and investment which has been "sorely missing" over the last decade, presenting material opportunities for its businesses and the Commercial Products division, in particular.
“Consumer demand will be constrained for some time, and the new GNU may take time to ensure the infrastructure rebuild, so desperately needed across SA, happens with urgency and intensity,” said CEO Mpumi Madisa. “The GNU has pledged to increase infrastructure massively through a more integrated and holistic approach.”
She said that as locals and the rest of the world had responded favourably to the GNU, it was important to entrench that positive sentiment through tangible actions, such as simplifying the regulations on public-private partnerships and employing capable and qualified people for senior positions in municipalities.
Business Day reported on Monday that deputy finance minister David Masondo had told audiences at the SA Tomorrow investor conference in New York that the Treasury was working to find creative ways to derisk private investment into infrastructure, with SA’s electricity transmission grid as a starting point.
Down 0.31% to R291.23 on Tuesday, Bidvest shares have jumped 19% in the last six months.
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