Multilateral finance institution the African Development Bank (AfDB) has approved a $1 billion corporate loan to South Africa’s state-owned freight transport and logistics company Transnet to support its recovery and growth plans.
The 25-year loan was approved by the bank’s Board of Directors in July and is fully guaranteed by the South African government. The loan will help finance the first phase of an $8.1 billion recovery plan for Transnet to improve the country’s rail and port infrastructure.
“Transnet, the custodian of South Africa’s critical transport and logistics infrastructure, plays an indispensable role in the economy of the country, ensuring a competitive freight system and serving as a gateway to the SADC region,” stated AfDB Vice President for Private Sector, Infrastructure and Industrialization Solomon Quaynor, adding, “Our partnership will enable Transnet to execute a comprehensive Recovery Plan, addressing operational inefficiencies, particularly in rail and port sectors.”
Transnet has faced operational challenges in providing adequate freight rail and port services due to underinvestment and maintenance backlogs. In the financial year 2022/23, Transnet’s freight volumes declined to 150 million tons from 226 million tons in 2017/18.
The company’s recovery plan, announced in October 2023, aims to rehabilitate freight, rail and port infrastructure and return the company to profitability over 18 months. Under the recovery plan, Transnet will split its freight rail subsidiary into two units, an infrastructure management company and an operating unit.
“The loan extended by the bank will make a significant contribution to Transnet’s capital investment plan to stabilize and improve the rail network and to contribute to the broader South African economy,” stated
