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Swallow The Black Brick Road

Infrastructure. Africa needs it; but no one wants to pay, especially when it costs $1.8 billion for a road.



They stretch for hundreds of kilometers. When it’s good, you feel like you are gliding over jet-black silk. But, when it’s bad, it’s like you’re juddering through dust and potholes. Driving an economy without roads is never easy. Especially when it comes to African roads, where transport costs remain among the highest in the world, according to independent analyst Andrew Maggs. The question is­: who pays for it?

The World Bank reports that only six countries in Sub-Saharan Africa have more than a fifth of their roads paved. Those with the most tar roads may surprise many: Ghana; Botswana; Mauritania; Morroco; Niger and Ethiopia, far from the economic giants of the African continent.

This is a sign that Africa is crying out for investment in roads.

“At present, Africa’s road network is falling short of its function as a means to bring about greater regional integration and boost trade. For landlocked countries in Africa, transport costs, including road transport, can reach up to 75% of the value of exports. The cost of building road networks, and thereafter their maintenance, is costly,” says Maggs.

A key to investment is the Trans-African Highways System, he says. It comprises of nine main corridors on the continent, totaling over 59,000km, linking Cape Town to Cairo.

You could argue that Rome wasn’t built in a day, but the Romans did build roads that helped build an empire; roads which, to this day, still exist. On the other hand, they didn’t have to handle heavy low-load coal trucks or 16-ton wheelers carrying groceries from Durban harbor to Johannesburg along congested roads.

This kind of heavy traffic is the reason why the South African government built a wider, faster freeway through Gauteng. Now, it wants its money back. Whether they like it or not, drivers in Johannesburg are going to have to pay for the R18 billion ($1.8 billion) road the government built, stretching more than 185km around Johannesburg and Pretoria; a road that has undoubtedly eased traffic.

This has been fought through court and on the streets. The government wants people to pay R8.5 billion ($842 million) alone for a hated tolling system. On the front line is Wayne Duvenage, former Avis car rental agency owner and leader of the Opposition to Urban Tolling Alliance (OUTA).

“At this stage I want to set the record straight. We know we have to pay for the roads. Society ultimately pays for all upgrading and infrastructure development. The problem here is how we pay for the roads. As several companies started to engage with South African National Roads Agency Limited (SANRAL) we realized how onerous and cumbersome and how inefficient the system is,” says Duvenage.

There are 3.5 million people on the road in Johannesburg. In October 2007, all it took was an advert in six newspapers, which drew a mere 28 responses, to legitimize the road agency SANRAL’s project, the Gauteng Freeway Improvement Project (GFIP), he says.

No one complained when development began, before the 2010 FIFA World Cup, until the first tariff prices for e-tolls emerged, explains Duvenage. The public’s gripe is the annual R1.5 billion administrative cost, omitted by SANRAL, when the tender was gazetted. When people started adding this to the road cost of R1.9 billion ($190 million), to be paid back over 20 years, opinions started to change.

Gauteng drivers are not happy that they will pay on average R300 ($30) a month for a road for which they already pay a fuel levy and extra taxes.

Over three years, there have been numerous protests against e-tolls. Bikers have revved their anger on the highways. The South African labor union, COSATU, has blocked the traffic with slow driving, vowing to cripple the system. OUTA managed to win a court interdict banning e-tolls in April 2012. The court ruling was overturned by the South African Constitutional Court a few months later. SANRAL argued that if e-tolls were not implemented immediately the debt would be too great for the country to recover.

In mid-June, more controversy, Kapsch TrafficCom AG, the overseas company awarded the billing tender, told Bloomberg that it would get an additional annual revenue boost of R670 million ($67 million) through South Africa’s e-tolls. The announcement inflamed opinion yet again.

“Who could believe SANRAL’s claims that e-tolling is beneficial to South Africans when the only proven financial benefit to date is to Kapsch? Kapsch’s bold trumpeting of their revenue figures has unmasked e-tolling as a government-assisted [program to create] profits for a foreign-based entity,” says Duvenage.

According to Vusi Mona, SANRAL spokesperson, money will not be going overseas. All toll fees collected will go to SANRAL, except for the service costs of e-toll, which will go to Kapsch, as specified in their tender contract, he says.

Kapsch have posted an 18% drop in stock, since the delay. SANRAL has also had its fair share of knocks, their average monthly expenditure to pay for GFIP will amount to R601 million ($60 million). Credit rating agency Moody’s has announced a two notch downgrade of SANRAL’s rating. The company says it has had to suspend its marketing activities and limit the sale of its bonds to depress borrowing costs. Another cost to the public, SANRAL says, is that future road plans have been put on hold, despite a government bail-out of R2 billion ($200 million).

Had the interim interdict remained in place, parliament may have had to appropriate more money from the national revenue fund at the expense of tax payers, even those who do not live in Gauteng, says Mona.

The final appeal is to be held at the Supreme Court, on September 25 and 26. If successful, OUTA’s last roll of the dice against e-tolls could see it scrapped, leaving SANRAL to find another way of collecting the debt.

“We just don’t want to be ripped off. I think they planned this very sketchily; they didn’t do enough research. They didn’t engage properly. Now the chickens are coming home to roost,” says Duvenage.

The campaign against e-tolls is not as strong as they would have liked. Duvenage says people have had  problems digging into their pockets to win the fight. In legal fees alone, OUTA has raised R8.4 million ($840,000) but needs another R3 million ($300,000) to tackle the government in court. They need to raise R1 million ($100,000) by July 21, which the official opposition party, the Democratic Alliance, has decided to fund. Duvenage estimates the government’s legal costs run more than R25 million ($2.5 million), enough to pay for 1.8km more road on the highway.

“We are fighting a case that government has free reign over our taxes to spend our tax money in the courts and society has to go out with a begging bowl,” he says.

In response to OUTA’s call for more private money, Mona says OUTA is wasting public money by going against past court rulings.

In the meantime, SANRAL’s e-toll system was awarded first place in the 2013 Toll Excellence Award for Technology by the International Bridge, Tunnel and Turnpike Association (IBTTA). It did not win a prize in the other three categories: customer service; operations; and social responsibility.

As the debate continues, more and more anger is being generated by rises in fuel levies, food prices and the general cost of living in the city. For many of Johannesburg’s citizens, the roadways provide the only reasonable means of travel to and from work.

There is no doubt the N1 is the envy of Africa, the question is will anyone pay for it? It is likely that they will have no choice.

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