<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
JIMMY MOYAHA: Following on from last week\u2019s commitment by the National Treasury, that government would be committing a little over R1 trillion towards infrastructure development in the South African economy, we will be taking a look at that in the context of some of the moving parts within the infrastructure economy, namely transport and logistics.<\/p>\n
They form a critical component within the infrastructure element of the South African economy.<\/p>\n
We\u2019re going to be taking a look at this particular sector in a bit more detail with the senior specialist for transport and logistics at Absa Business Banking, Bernard Vilakazi. He joins me on the line now to see what we make of these new developments. Bernard, lovely having you on the show. Thanks so much for taking the time.<\/p>\n
Let\u2019s perhaps start with an overview of South Africa\u2019s transport and logistics at the moment and where it stands. We\u2019ve gone through quite an evolution from having a transport and logistics sector that has been struggling to one that potentially looks to be on the mend.<\/p>\n
BERNARD VILAKAZI: Thanks for that. I think you just summarised it nicely when you spoke about the Budget speech and what was promised.<\/p>\n
What\u2019s interesting is if you look at 2026, we do see an improved rail and port performance.<\/p>\n
Together with the public infrastructure investment from Treasury, we see transport and logistics receiving the largest share \u2013 which is designed to lower delivery costs, unlock the economy through exports and imports and also maintenance of the roads, because that\u2019s the infrastructure that the sector needs.<\/p>\n
Also, not forgetting the people, the skills that need to work in the sector. So if you have the likes of Prasa [Passenger Rail Agency of South Africa] working and raising those annual passenger trips for employees to get to work, we are bracing ourselves for an improved, reliable, productive sector [in] 2026.<\/p>\n
But further to that, having Transnet getting funding from Treasury means infrastructure at the ports, at the terminals will improve and move our goods faster in and out of the country.<\/p>\n
So quite an exciting 2026 that we are looking forward to as Absa.<\/p>\n
JIMMY MOYAHA: Bernard, we\u2019ve often discussed how essential transport and logistics is towards a functional economy \u2026 that is able to grow and move forward.<\/p>\n
When we look at the South African economy, given how many diverse sectors we have within [it], from agriculture to manufacturing to tourism, we have quite a robust economy. How important is it now, more than ever, that transport and logistics work as they should be, or as they are intended to?<\/p>\n
BERNARD VILAKAZI: I\u2019ll start this off by saying, if you go to any transport logistics student in their first year, you know that transport is a derived demand. It needs other sectors and it supports other sectors.<\/p>\n
When logistics works, that\u2019s when you see other sectors such as agriculture and you see manufacturing, because if you look at agriculture, the farmer wants to get his product to the fork; to the consumer.<\/p>\n
Manufacturing, the just-in-time [principle], they need the raw materials in, they need the finished product out. Retail, they need to stock up. Tourism, we need visitors into our country for our GDP [gross domestic product] and GDE [gross domestic expenditure] to grow.<\/p>\n
Gross domestic expenditure measures total spending by residents within a country\u2019s borders and comprises household consumption, investment, and government spending.<\/p>\n
In contrast to gross domestic product, gross domestic expenditure includes imports but excludes exports.<\/p>\n
We also need public servants to be at work. So that\u2019s where transport comes in, and the state is now shifting towards growing and enhancing logistics.<\/p>\n
We also need our SOEs [state-owned enterprises], provinces, municipalities, where transport sits as well, to account for this growth that we have projected for 2026.<\/p>\n
I would say that without transport, which is the heartbeat, it stops functioning and it affects those other sectors that we have mentioned: tourism, manufacturing and agriculture.<\/p>\n
Something that we look at, at Absa, is that the growth forecast is not in a silo when it comes to transport. We also look at other sectors to see if transport is not doing well, how does it impact the other sectors?<\/p>\n
JIMMY MOYAHA: Bernard, how then do you support the transport and logistics sector? From a government perspective, we\u2019ve seen their commitments, but I imagine there is also a level of support that is required from the private sector and from the financial institutions like Absa.<\/p>\n
How then do you see that support starting to fit in so that we continue to maintain that robust infrastructure?<\/p>\n
BERNARD VILAKAZI: I think when we think transport and logistics, we should not just think immovable or movable assets, whether it\u2019s the truck or the warehouse that you see as you drive on your national freeways \u2013 but also think about what other products are needed for those businesses to be sustainable.<\/p>\n
I think it shouldn\u2019t be a single product. It should be various bundles that help the business to be able to operate in its ecosystems.<\/p>\n
When I look at it, it\u2019s basically maintaining your cash flow ecosystem, integrating the various products that are offered at Absa, which is transactional banking, working capital, supply chain finance, trade finance.<\/p>\n
Also, insuring the asset itself because we do know the environment that these assets operate in. There\u2019s also daily banking that needs to happen. There\u2019s fuel that needs to go into that asset. There is electricity that\u2019s needed in that warehouse.<\/p>\n
Also, because we are not an economy in isolation, there are international players, so that\u2019s where the international banking comes in that we need to think about as we [build solutions for] and grow this sector.<\/p>\n
JIMMY MOYAHA: Bernard, let\u2019s stick with the international conversation for a moment. We know that over the weekend, the developments out of the Middle East have really rocked the markets.<\/p>\n
I can imagine alongside markets, supply chain and logistics infrastructure at a global level has been affected or will likely be affected if it hasn\u2019t already.<\/p>\n
How then do the transport and logistics operators and the players in the space start to position themselves when looking at global developments like that, or even just looking at continental agreements? The likes of the African Free Continental Trade Area [AfCFTA\u00a0] come to mind \u2026<\/p>\n
How do you then start to say, okay, if I\u2019m a logistics player and I want to expand my network, or I want to be able to reach greater markets, how do you position that?<\/p>\n
BERNARD VILAKAZI: I think quite interestingly, if you look at geopolitics or any shocks that we see in the economy, those who survive are those who have risk and compliance structures in place.<\/p>\n
I think as a financial institution, as Absa, as you talk to your clients in transport and logistics, make them aware. [Ask] are you risk-averse? Do you have the risk compliance in place? And how do we support them?<\/p>\n
I think the first one for me is the risk framework. You don\u2019t wait for something to happen. You always anticipate.<\/p>\n
Whether you are a warehouse or you\u2019re on the road, you\u2019re on the sea or you\u2019re in the air, it\u2019s having those risk screens and understanding what you will do when something [negative] happens.\u00a0I think that\u2019s what we have built for our clients.<\/p>\n
Also, working capital because, like you said, we\u2019ve already seen the announcement of fuel going up on Wednesday because most of those countries that are involved in those geopolitics hold the bulk of the oil.<\/p>\n
So what does it mean for a transporter? They might not have anticipated that the fuel will go up and they\u2019ve not built that into their rates.<\/p>\n
So it will hamper their regional viability and also their payment cycles, because if someone is not able to pay you due to the conflict, it does affect your business.<\/p>\n
I like that you\u2019re bringing up the African Free Continental Trade Area [a landmark agreement that establishes a single market for approximately 1.4 billion people across 55 member states of the African Union].<\/p>\n
If you look at that, and from an African perspective, if you look at the region itself, I travel in the SADC [Southern African Development Community] and I look at [whether it\u2019s] easy doing business.<\/p>\n
Are you doing business with your neighbours? Because when the world \u2013 and we learned this during Covid \u2013 shuts down, you start going to your neighbour to do business or ask for that [cup of] sugar.<\/p>\n
For me, it\u2019s also bringing that up in the African continent \u2013 what have we set up to continue working and diversifying our markets? Also, most importantly, making it easier to do business, because we know the challenges we face on the continent.<\/p>\n
What I like about AfCFTA is that it\u2019s going to make it easier for someone to do business within the continent without having numerous compliance documents requested.<\/p>\n
As Absa, we need to structure end-to-end cross-border solutions, trade finance, foreign exchange, hedging. So yes, there should be cash flow models to support the speed of adopting the AfCFTA.<\/p>\n
JIMMY MOYAHA: Transport and logistics being the heartbeat of an economy and essential to making sure that the other components in the economy and in the ecosystem function at their optimal best.<\/p>\n
That is why that sector continues to be such an important sector to focus on, and that is why the team at Absa Business Banking have set their sights on making sure that they can contribute towards that.<\/p>\n
We\u2019ll leave the conversation on that note. Thanks so much to the senior specialist for transport and logistics at Absa Business Banking, Bernard Vilakazi, for joining us to take a look at the importance of the sector in business.<\/p>\n
Brought to you by Absa Business Banking.<\/p>\n
Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.<\/p>\n
#Infrastructure #spend #signals #turnaround #transport #sector<\/p>\n","protected":false},"excerpt":{"rendered":"
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