Can Rail Beef Up South Africa’s Economy?
South African President Jacob Zuma is hoping to beef up the country’s economy by launching a major infrastructure-building program. He’s planning to invest nearly $40 billion to build water, road and rail infrastructure all over the country. Two-thirds will be dedicated to rail projects.
"For the year 2012 and beyond, we invite the nation to join government in a massive infrastructure development drive" he said during his State of the Nation address Thursday.
In addition to roads projects, dams and utilities, most of the infrastructure work is aimed at improving the country’s vibrant mining industry by making better rail connections between mining areas and ports. Much of this investment will be focused on the northernmost province of Limpopo, where Zuma wants to "unlock the enormous mineral belt" of coal, platinum, palladium, chrome and other minerals.
He also proposes creating the Durban-Free State-Gauteng logistics and industrial corridor, which would run between the Johannesburg metropolitan area and the port city of Durban. Adding significant rail capacity here, as well as between mineral producing areas and ports, is expected to greatly increase the overall transportation infrastructure in the country.
In 2008, mining represented 5.6 percent of the country’s GDP. But as the country’s planning minister, Trevor Manuel, noted recently, the mining industry’s contribution to the South African economy has been on a decline, dropping from a $13.5 billion contribution to GDP in 1993 to $12.2 billion in 2009.
He and Zuma argue that the country’s lacking infrastructure has limited the success of the mining sector. All of this underlines the leadership’s emphasis on sustaining the mining industry as a key jobs creator.
"The massive investment in infrastructure must leave more than just power stations, rail-lines, dams and roads," Zuma said. “It must industrialize the country, generate skills and boost much needed job creation."
But as the Mail and Guardian newspaper notes Zuma’s speech, it’s unclear exactly where the money to fund these projects will come from.
Photo credit: Mike Hutchings / Reuters