The R2.8bn private investment that's unlocking SA’s struggling rail logistics sector
South Africa’s freight rail sector is set for renewed private-sector participation as African Rail Co. (ARC), a closely held UAE-based rail logistics company, plans to raise around $170m (approximately R2.8bn) to acquire locomotives and wagons for operations on key national and regional routes.
Source: Pexels.
The investment comes as South Africa continues its broader logistics reform programme, which aims to introduce private operators into parts of the freight rail network in an effort to improve efficiency and ease pressure on state-owned Transnet.
According to reporting by BusinessTech, ARC was among 11 successful bidders awarded access to operate trains on the country’s freight network, as part of a government initiative valued at nearly R2tn ($119bn) designed to boost capacity and performance through private participation.
Operational inefficiencies at Transnet—responsible for both rail freight and major port infrastructure—have been widely cited as a significant constraint on economic growth over the past decade, with congestion and equipment shortages affecting export competitiveness.
ARC chief executive officer Youssef Elgonaid said the company will initially focus on high-volume corridors, including the line linking Gauteng, South Africa’s economic hub, to the Port of Durban, which handles the majority of the country’s container traffic. The operator will also run services on routes extending to South Africa’s northeastern border with Mozambique.
Regional rail expansion
Beyond domestic freight, ARC’s strategy includes regional logistics integration. This includes transporting copper from mines in the Democratic Republic of Congo through to Mozambique’s Maputo port, strengthening cross-border mineral supply chains in southern Africa.
Elgonaid noted that investor interest in rail logistics is growing, driven by rising global demand for critical minerals and the need to shift heavy freight away from road transport. He emphasised that rail remains the most viable overland solution for high-volume corridors across the region.
The funding structure is expected to comprise roughly 30% equity and the remainder in debt, with interest reportedly coming from Middle Eastern private equity investors, shipping companies, and development finance institutions, although no parties have been formally disclosed.
If successful, ARC’s entry could mark another step in reshaping South Africa’s freight logistics landscape through blended public-private infrastructure models aimed at improving competitiveness and unlocking export capacity.