The African Development Bank Group has approved a R18.85bn (US$1bn) corporate loan to Transnet, South Africa’s major freight transportation and logistics company, for its recovery and growth plans.
The 25-year loan is fully guaranteed by the government of South Africa and will facilitate the first phase of the company’s R152.8bn (US$8.3bn) five-year capital investment plan to improve its logistics capacity.
The recovery plan, launched in October 2023, seeks to rehabilitate the company’s infrastructure and accelerate the relaunch of operations over 18 months, focusing on restoring operational performance and freight volumes to meet customer demands.
Enhancing logistics growth
Following the approval of the loan on July 12, African Development Bank’s vice president for private sector, infrastructure and industrialization, Solomon Quaynor, said, “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 [Southern African Development Community] region.
“Our partnership will enable Transnet to execute a comprehensive Recovery Plan, addressing operational inefficiencies, particularly in rail and port sectors. It is aligned with South Africa’s strategic Roadmap for Freight Logistics System, and overseen by the National Logistics Crisis Committee, chaired at the Presidency level. This initiative signifies our commitment to enhancing national logistics capabilities and driving sustainable economic growth.”
Michelle Phillips, group chief executive of Transnet, added, “We appreciate the support demonstrated by the African Development Bank, 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. The accompanying grant funding to the loan will also greatly assist Transnet with to its energy efficiency efforts and with Infrastructure Project Preparation initiatives.”
Further financial support
In addition to the corporate loan, the African Development Bank is contemplating two targeted grants, including US$750,000 in technical support from the Sustainable Energy Fund for Africa (SEFA) to improve energy efficiency and associated measures, in line with Transnet’s net zero plan. The second grant funding comprises US$1m from the Infrastructure Project Preparation Facility of the New Partnership for Africa’s Development (IPPF-NEPAD), for technical assistance to help accelerate railway reforms and address structural and regulatory inefficiencies.