Visit by Delegates of Committee for Economics of the House of Deputies of the Parliament of Czech Republic

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
11 May 2006
VISIT BY DELEGATES OF THE COMMITTEE FOR ECONOMICS OF THE HOUSE OF DEPUTIES OF THE PARLIAMENT OF THE CZECH REPUBLIC

Chairperson:

d system. He stated that urgent areas needing to be addressed were the upgrading of the rail networks, the establishment of better public transport links, and issues of road safety.

The leader of the Czech delegation, Mr M Melčhŕk stated that this meeting had provided a valuable opportunity for his delegation to give an indication of the expertise available, which could be conveyed by both his delegation and the Committee to relevant public and private entities.

MINUTES
The Chairperson welcomed all delegates on behalf of the Committee. Mr M Melčhŕk, leader of the delegation, thanked the Committee and reported that the delegation was interested in investigating and supporting co-operation and trade exchange between businesses in South Africa and the Czech Republic. He stated that mutual trade had recently become more balanced and although Czechoslovakia’s trade lagged behind South Africa’s, there had been an almost 100% increase in trade during the past year. He was aware that South Africa was working hard to improve its transport infrastructure and therefore felt that it would be useful to hear how its needs could be met with resources from the Czech Republic. He stated that he could also, if time permitted, advise of the constitutional and parliamentary system in his country.

The Chairperson replied that the Committee, although it could not of course become involved in trade, could comment and advise of the challenges to enable public and private sectors to assess methods of deepening trade relations.

Mr Melčhŕk confirmed that the information gained would be passed on to entities likely to become involved in cooperative ventures.

The Chairperson reported that the delegation had visited twelve years after the effective ending of apartheid, and ten years after the new Constitution had taken effect. The recent anniversary celebrations had highlighted some of the main achievements of the decade and for the first time South Africa could see consolidation and stabilisation of a constitutional non-racial democracy. Institutions, including Parliament, were functioning well; there was a strong independent judiciary, an effective, independent and free media, and all institutional features of a vibrant democracy. However, three hundred and fifty years of colonial oppression and half a century of apartheid oppression had left strong systematic realities in the social and economic arenas. Thus South Africa remained with "two worlds within one society" – as evidenced by the squatter camps. These realities were dramatically reflected in the general area of transport.

The Chairperson stated that in the more advanced sector, there was a relatively well-developed transport infrastructure. Excellent freeways and road systems linked all the major cities in South Africa, and serviced the city areas. There were modern airports, with Johannesburg International Airport being a freight hub for the continent. There were seven major ports, Cape Town being the fourth largest, which were generally modern and had good infrastructures. There was a fairly extensive rail system. Historically South Africa had benefited by having its mining resources located in the interior, away from its ports, so that that the colonial powers were focused on the ports and the industrial revolution in the interior, forcing the creation of an effective national infrastructure, as opposed to many other African countries where the resources were located close to the international ports, leaving the interior poorly developed. The colonial needs had driven the capitalist economy during the nineteenth century, but serious structural problems had arisen during the last decade of apartheid, resulting in negative growth. Since the democratic breakthrough of 1994 there had been sustained growth, averaging 3.5 to 4% per annum, which, although not yet sufficient, was at least consistent. Many factors had driven growth, but key indicators included the opening of international markets, and the lifting of economic sanctions imposed during the apartheid years. Growth was currently driven by the Peoples’ Republic of China and India, and there was a demand for South African products of coal and iron ore. The stabilisation and de-racialisation of society increased domestic demand as increased numbers were able to enter the consumer middle class.

This growth had revealed a series of constraints and blockages within the freight logistics systems. 90% of trade – both export and import – passed through the seaports, where serious constraints and bottlenecks had been experienced. Like other countries, South Africa had underestimated the rapid growth in container-based freight and delays had arisen in part through lack of effective investment in the equipment required. The main container port terminals were situated at Durban (the major port servicing the industrial heartland of Gauteng), Richards Bay (which handled the majority of tonnage export, mostly in coal), East London (which specialised in car export, with a Mercedes Benz factory close to the port), Port Elizabeth (which had developed a new port of Coega to take large vessels and which hoped to attract a large aluminium smelting plant as an anchor tenant in the Coega project), Cape Town (whose main speciality was fruit and fruit by-products, including wine) and Saldanha (specialising in iron exports). There was significant major infrastructural development in all ports to accommodate container vessels, cranes and other equipment. Spending for revitalisation of ports, over the next four and a half years, was estimated at US$ 1 billion.

There would also be major spending on the freight rail systems, in particular the key corridor linking Johannesburg, Pretoria and Durban, which was the major logistics line for exports and imports. The Czech delegation would probably hear more on this issue from public entities whom they would meet shortly.

The other significant area of upgrading and spending related to airports. The Johannesburg International Airport was the regional if not continental hub and a new international airport would shortly be built in Durban, a huge new domestic terminal in Johannesburg, and extensions to the Cape Town airport. The Airports Company of South Africa was a profitable, publicly owned entity, over which the Transport Portfolio Committee exercised oversight.

Two other areas drove these specific developments. International tourism was strong, with increasing numbers of tourists coming from Africa, including those coming in on shopping trips. South Africa would also be hosting the 2010 World Cup Soccer Finals, which provided a useful incentive for South Africa to attend to upgrades that were in any event necessary.

The major freight within South Africa, in terms of tonnage, was carried by road transport. Whilst it would be desirable to see more freight return to the railways, for environmental, safety and road maintenance reasons, road trucking would remain a significant component of the freight system.

Despite the constraints, which had been mentioned, there was good expansion and progress in all areas, and business opportunities were available.

Two key areas showed poor performance. Firstly, the mobility of the majority of South Africans in most South African towns and cities was limited due to a very poor public transport system. Secondly the number of fatalities and injuries on the roads remained at unacceptably high levels. Towns and cities still reflected the spatial realities of the apartheid years. City centres were largely administrative centres, with limited human habitation, so that although they were active during the day they were empty at night and over weekends. "Green" suburbs lay outside the centres, housing the upper middle classes, and were formerly all white-owned. Poor townships lay on the outskirts, with people who had been excluded racially from other areas, and these townships were far from work, shops and public services. Although there had been many positive developments over the past ten years – such as the provision of two million houses – they had regrettably, for economic reasons, needed to use the cheapest possible land located far from city centres, entrenching the spatial imbalance.

South Africa therefore faced several challenges. It could not speak honestly of an effective public transport system. 65% of all commuters used minibuses, which were often overloaded, lawless, involved fights in competing for passengers, and which were often controlled by groups employing Mafioso techniques. However, minibuses did provide mobility to people where the public transport system had failed to do so. South Africa planned a major spend and overhaul on public transport and was also looking to recapitalise, formalise and democratise the minibus sector. A Czech manufacturer had already shown interest in this area, but delays had occurred on the South African side since the project would be particularly complicated in its implementation.

The level of road accidents, injuries and fatalities posed a serious problem. These resulted from the combination of first and second world situations – fast freeways with imported luxury cars travelling at high speeds, with squatter camps situated right next to the freeway. There were more than 12 000 road fatalities every year, and 40% involved pedestrians. This was a social problem, but South Africa was interested in exploring all available technologies and experience in dealing with enforcement, effective weighbridges, and other methods to bring down the level of fatalities and accidents.

Mr Melčhŕk thanked Mr Cronin for his clear and comprehensive summary of the South African infrastructure and challenges. He reported that the Czech Republic would welcome opportunities to engage in joint projects, and delegates were certain that many opportunities existed. Similar work was already being done in improving the corridors linking the major towns and cities in the Czech Republic, and he was sure that experts in South Africa would benefit from hearing more of the control and security systems for rail transport, particularly where trains travelled at high speed, and where safety and security were of prime importance. There were certainly other opportunities in the rail system, such as production of special sleepers for high-speed transport, meeting safety specifications.

In regard to the development of ports, the Czech Republic had expertise in producing cranes and in managing logistical systems. In the area of public transport, the Czech Republic similarly had considerable expertise and was working on systems that not only covered a particular city, but also linked the entire region. He was convinced that in the larger areas only integrated systems would work, with the backbone of such systems lying in rail transport, and branches being provided by bus transport. Such systems needed to be well planned and should be based on an integrated financial model so that passengers could use either or both of the systems, paying through an integrated billing system. Both models and systems could be designed and provided by the Czech Republic. Naturally it would be preferable for transport systems to be produced and serviced within South Africa, and joint ventures seemed to be the most desirable. Since transport was a sector where public and private entities must co-exist, his delegation would be pleased to hear of opportunities in both sectors. Private sector entities both in the Czech Republic and South Africa would no doubt pursue the available opportunities themselves once they were aware of the possibilities. Of course, outside the limited areas mentioned, there was further expertise, and therefore much more to be discussed by experts working in the field of transport.

The Chairperson commented that the Czech Ambassador and representatives from the Department of Transport had been noting Mr Melčhŕk’s remarks, and that this meeting could be regarded as an exploratory one, that outlined the issues, provided both the South African and Czech delegates with the ability to pass on the information received, and opened the door for the exchange of further information, publications and technical information to all relevant public and private entities.

The meeting adjourned.