Transport key to SA economic recovery

02 December 2020 | Web Article Number: ME202021446

Commerce & Trade
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THE transport and logistics sector will be a vital cog in the wheels of South Africa’s economic recovery and further afield in sub-Saharan Africa – and all the more so if sufficient attention is paid to addressing inequalities in the sector.

That’s according to Trudie Nichols, consultant in ports, transport and logistics at leading African law firm, Bowmans, who said a strong focus on localisation, together with progress towards racial and gender parity, would be critical in realising the economic benefits of the transport sector as a growth catalyst.

“COVID-19 has induced a crisis in the ‘real economy’ of production and not merely in the financial sphere – a crisis that the transport and logistics sector will play a key role in resolving,” Nichols says, noting that the sector’s ability to realise its growth potential depends on the successful interplay among three main factors: infrastructure investment, structural reforms and policy and regulatory measures.

“Efforts to reduce inequalities should cut across all three areas. It’s encouraging to see this being acknowledged both in South Africa’s recently announced Economic Reconstruction and Recovery Plan and in the African Union’s African Continental Free Trade Area (AfCFTA) agreement.”

She said that in the case of South Africa’s recovery plans, there is an expressed resolve to work with women-empowered companies to facilitate the greater participation of women within the economy and to progressively reach the target of directing at least 40% of procurement spend to such enterprises. Other commitments include legal remedies to close the gender pay gap, enable access to assets such as land, and ensure women’s financial inclusion.

“Similarly, in the delivery of infrastructure, the South African Government plans to focus on the empowerment of women, young people, persons with disability and military veterans in a manner that fosters competitiveness and resilience.”

Nichols said broad-based public-private partnerships (PPPs) were expected to be important mechanisms in the delivery of infrastructure. “Facilitating PPPs will likely include a review of the Public Finance Management Act and the Municipal Finance Management Act.”

Structural reforms, too, will be geared towards promoting equity, she said. “Some of the reforms envisaged include lowering barriers to entry to make it easier for businesses to start, grow and compete; and addressing racial, gender and geographical inequalities that hamper deeper economic growth and development”.

Potential impact of measures

While these measures are not specific to the transport and logistics sector, their impact on the sector and the wider economy could – if implemented appropriately and timeously – be vast.

“Apart from its direct economic contribution, transport contributes through job creation and derived economic activities, including insurance, finance, packaging, handling and transit operations. The sector touches almost every economic activity in South Africa and beyond, and efforts to address current inequalities could have far-reaching impact.”

Nichols said addressing inequality was also a key objective of the AfCFTA agreement, the implementation of which is coming closer. Of the 54 countries that have signed the agreement, 34 countries have now complied with their domestic requirements for the ratification of the AfCFTA. Of these, 30 countries have formally deposited their instruments of ratification.

“While the agreement aims to promote economic development for all, it also addresses exclusionary development, particularly along gender lines and in other marginalised communities.”

She said the United Nations Economic Commission for Africa (UNECA) has noted that the economic empowerment of women will be one of the effects of the AfCFTA. Total income for female labour is expected to grow faster than average income growth in all regions except Southern Africa.

“Ultimately, efforts to address inequality in the transport and logistics sector should have lasting positive consequences for African economies.”

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