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SPEECH
DIRECTORY:
Background on RDC
USA
Argentina
Guatemala
Peru
Estonia
Malawi / Mozambique
Investment Parameters
The Case for Privatization in Africa
Case Study: Financing the Nacala Corridor
Structural Trends in African Privatizations
Conclusions
Q & A Session
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Excerpt 1
“Four
years after start-up, Comazar and Spoornet International are
active in 17 African countries…Many railway operators are
hobbled by lack of rolling stock, poor maintenance and weak
management. They
are crying out for the kind of service offered by Comazar and
Spoornet International, which has beaten off some of
Europe’s best railway operators in winning railway concessions
across Africa…”
(Enterprise,
December 2001)
Excerpt
2
“Angry Customers say Shape Up or We’ll hit the Road…
…Claims by Spoornet…that it could achieve greater
efficiencies were “rubbish” and that its top management is
“incompetent”…These outbursts were triggered, in part,
by a proposal by Spoornet to reduce its wagon fleet from 90,000
to around 60,000 because Spoornet executives believe greater
operating efficiencies would more than compensate. This is
despite Spoornet’s inability to handle the business on offer
with its current wagon fleet.”
(Financial
Mail, 18 October 2002)
Excerpt
3
“Corporate SA is struggling with Spoornet’s poor service,
lax management and soaring tariffs…a number of customers
are calling for increased private-sector involvement…a
move…ruled out two years ago when the current
structure of Spoornet was introduced.”
(Financial
Mail, 23 August 2002)
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Conclusions
(continued)
But let me tell you what does scare me. What scares me is reading about
Spoornet’s activities around the continent and our ability to compete
with the government railway of South Africa.
What you see here (Excerpt 1)
is an excerpt from a newspaper article from the end of Year 2001: “…they
have beaten off some of Europe’s best railway
operators.”
Well, that’s an insult — they also have beaten off some of
America’s best railway operators in winning railway concessions across
Africa.
But
what I think is truly scary is this domestic perspective on what is
going on in South Africa right now.
We have heard about how South Africa is active in rail
privatizations around the continent and yet this is what is going on in
South Africa (Excerpt
2).
Spoornet is doing a scrapping program that reduces its capacity
to handle traffic in its own country to the point where its own
customers are making these kinds of comments in the press. As a personal
note, as somebody who has been traveling in southern Africa since the
early 1980s, I think this is a tragedy that a national railway system
could be brought to this.
But what is most important from the perspective of this conference is
that privatization in South Africa has been ruled out, even as South
Africa is participating in privatizations elsewhere around the
continent. The text on the right (Excerpt
3)
basically states that while South Africa is aggressively pursuing
privatizations outside of South Africa, it has been successful in
resisting it within its own country.
This
is not intended as an attack on Spoornet, but simply an outside
perspective on what should make sense for both South Africa and Southern
Africa, which is: adherence to market forces as opposed to political
forces.
The reason I say that is because the lessons of history are quite
clear; in the long run, market forces always win.
Always.
To conclude, we believe that competition from the public sector
represents greater risk than floods, famines, giant spiders, etc.
I would encourage you to think back to my previous comment which
was, “What are we looking for in terms of investment parameters?
We are looking for a serious government and rational
competition.”
Well, this is not rational competition; we cannot compete with
it.
But we will go anywhere in the world if we can compete on an
economic basis.
Fortunately for RDC we have been able to do that in the case of
the Nacala Corridor.
I am personally very proud to be associated with what is
essentially the first direct investment in rail by a private company on
the continent.
Thank you.
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