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Ghana alive with possibilities for South Africa’s Transnet

By Xolisa Phillip, in Johannesburg
Posted on Wednesday, 12 February 2020 11:35

ghana oil transnet south africa
A worker at the Stena forth drill rig for Springfield Group, the first independent African energy company to discover oil in deep sea, at the sea near Takoradi, Ghana. REUTERS/Kweku Obeng

A Transnet deal to develop a stretch of railway along Ghana’s Western region is not just good for the rail operator, but could have spill-over benefits for other South African companies.

Transnet is going to develop a 66km narrow-gauge railway line between Takoradi and Tarkwa in partnership with Ghana Railway.

The deal will be financed by the Ghanaian government, while Transnet is contracted to do the work.

READ Transnet lays a new track for Africa

The transaction forms part of Ghana’s efforts to revitalise the country’s rail network infrastructure, as articulated in the Railway Master Plan.

Transnet has seized on the opportunity to bolster its revenue base.

  • In its latest strategy, the South African state-owned logistics company has identified the rest of Africa as a key market in its bid to diversity its revenue base.
  • “This deal is good for Transnet. In the bigger scheme of things, it is good for South Africa because we are going to create opportunities for South African companies to come on board and participate,” says Transnet International Holdings programme director Wilson Mogoba.

South Africa and Ghana in AfCFTA context

Two weeks ago, Mogoba attended a meeting hosted by President Cyril Ramaphosa and attended by captains of industry. The attendees were all fixated on one question: how to prepare South Africa to become a more significant player in context of the newly created African Continental Free Trade Area (AfCFTA).

READ Transnet scores a rail deal in Ghana

This week, heads of state and government attending the African Union (AU) Summit in Addis Ababa voted in favour of South Africa’s candidate, Wamkele Mene, to become the first general secretary of the AfCFTA.

Mene, a well-regarded trade negotiator, was up against Nigeria’s Cecilia Akintomide and the DRC’s Faustin Luanga. Akintomide is a former high-ranking official of the African Development Bank, reports the Daily Maverick.

In another significant development for South Africa, President Ramaphosa has taken over the rotational chair of the AU for the next 12 months. He has announced plans to host two summits: one on investment and the other on security.

The outcome of the vote in Addis Ababa, unusual as it is for the AU because it constitutes a departure from tradition, is a major coup for South Africa. Crucially, the AfCFTA secretariat is based in Ghana.

West Africa’s growth factor

Transnet views Ghana and the rest of Africa, West Africa in particular, as exciting markets, according to Mogoba.

In the meeting with President Ramaphosa, there “was an acknowledgement of the fact the rest of the continent offers immense opportunities to South African companies. If you are looking at growth, you’ve got to have an eye on expanding your business into the rest of the continent,” says Mogoba.

In Nigeria, Transnet is the lead consortium partner in the country’s narrow-gauge railway project. “It’s a massive centre of the continent’s population. If you want to be in business on the continent, Nigeria is a good place to be in,” explains Mogoba.

“In my opinion, the Western African region is a very attractive space to be in. Ghana fits squarely within that [regional framework],” he adds.

Infrastructure a growth area

During the meeting with President Ramaphosa, South African captains of industry identified the continent’s infrastructure deficit as a key area of need. In particular, what economists call enabling infrastructure. In the logistics context, this would be infrastructure that facilitates the movement of goods via both seaborne and rail logistics.

“Central to what we do and how we interact with our clients in South Africa is being able to follow and help them with their logistical planning,” according Mogoba.

Spin-off benefits of Ghana rail renewal

In terms of Ghana, Transnet’s work will help revive “an entirely dead rail sector.”

When the railway sector begins to come alive, Transnet will create a need for input requirements such as wheels and railway sleepers.

This is because “all the consumables in railways in Ghana are 100% imported. The opportunities are how South African companies in this line of business can establish a presence in Ghana to be part of this industrial revival we are going to drive,” says Mogoba.

SADC link

In addition to Ghana, Mogoba looks after the North-South Corridor in the Southern African Development Community (SADC).

The North-South Corridor is a crucial supply chain that links the mining areas of the Katanga region in the Eastern DRC. It includes the copper belt regions of Zambia. It goes all the way through to Zimbabwe and SADC ports Durban and Richards Bay. It is the central spine which runs through SADC and is a vital logistics chain.

“It is critical to the economies of landlocked countries like Zimbabwe, Zambia [and] Botswana. For all of them, we need to make sure this supply chain works so that they have better access to import and export their goods through whatever neighbouring ports they end up utilising,” according to Mogoba.

All fired up to work

His final word on the Ghana project is that the Western line is not electrified – it is a diesel operation. That means Transnet does not expect to run into power supply issues in Ghana, as has been the case in South Africa.

He expects work on the Western line to begin around March. It will take six to nine months.

 

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