Analysing private investment potential for developing SA rails

“We now see a future where rail access is no longer the exclusive preserve of the state, and where room is made for private train operators to provide additional resources while encouraging competition.

“With this, government is sending a clear message: the door is open to innovation and shared progress, and the private sector has a critical role to play in supporting development. As for infrastructure developers, we also have an opportunity to play a key part both in developing new rail networks as the need arises, and assisting government in attracting the required investment by leveraging our experience and relationships with investors.”

The opportunities for private investment is significant. From locomotives to depots, sidings, control systems, and maintenance facilities, almost every element of South Africa’s rail system has potential for expansion and improvement.

According to an estimation by Jan-Louis Spelstra, an independent member of the Interim Rail Economic Regulatory Capacity (IRERC) late last year, private investment into rolling stock alone could reach between R200 billion and R400 billion in the medium term, with billions more expected in adjacent infrastructure and land development.

“The need is vast, as are the opportunities for private investors looking to direct their money toward something highly beneficial to the whole of South Africa,” says van den Berg. “A clear path for investors who want to be part of modernising the country’s rail system is actively being forged, and we have an opportunity to help drive that conversation, and shape the strategies that will drive this investment.

“Additionally, prospects aren’t limited to the tracks. The real opportunity may lie in the development of the infrastructure that will support the railways, including high-capacity terminals, modern signalling infrastructure, efficient loading facilities, expansion-ready corridors, as well the housing and commerce around new rail hubs, and the industrial zones that could spring to life as the country’s logistics networks continue to improve. All of this will hinge on infrastructure developers’ ability to deliver.”

If government’s plans to attract private funding are to succeed, a solid investment platform must be established that draws on lessons learned from PPPs in infrastructure development. Fortunately, van den Berg notes, South Africa won’t need to start from scratch, as similar systems are in use abroad.

Reforms such as the Luxembourg Rail Protocol amendment to the Cape Town Convention have already begun to reshape the global financial environment for rail investment, providing a stable foundation from which to build. By offering stronger legal protections for lenders and lessors of rolling stock, these frameworks reduce the risks traditionally associated with cross-border financing, making it more attractive for private capital to enter the sector.

For South Africa, this approach means that global financiers could find it easier to support local operators with competitive lease options, secured funding structures, and transparent asset registration. The result is a more stable foundation for private rolling stock investment, independent of state guarantees.

“We’re seeing the introduction of a smarter, sturdier rail ecosystem where the public and private sectors work in tandem. This will help to ensure that risks are better managed, financing is readily available and more easily accessible, and the regulatory environment is aligned with international best practices.

“Companies such as GIC, with significant experience in attracting these types of investments and utilising them for beneficial infrastructure development projects, can then take on a more active role. We must all step forward to engage with and assist government wherever needed in making this initiative a success,” concludes van den Berg.