The African Development Bank Group has approved a R18.85 billion corporate loan to Transnet for its recovery and growth plans.
The 25-year loan, fully guaranteed by Government, will facilitate the first phase of the company’s R152.8 billion five-year capital investment plan to improve its existing capacity.
Transnet has faced operational challenges in its rail and port businesses as a result from underinvestment in infrastructure and equipment, theft and vandalism, flooding, and the effects of Covid-19.
The company says it is committed to addressing past challenges, fostering integrity, and enhancing efficiency within the organisation, having made progress in some key areas including reforms in governance procurement and financial management.
Transnet’s recovery plan, launched in October 2023, seeks to rehabilitate its infrastructure and accelerate the relaunch of operations over eighteen months with a focus on restoring operational performance and freight volumes to meet customer demands.
“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,” comments African Development Bank’s Vice President for Private Sector, Infrastructure and Industrialisation Solomon Quaynor.
“Our partnership will enable Transnet to execute a comprehensive Recovery Plan (RP), 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.”
“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 stabilise 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,” comments Michelle Phillips, Group Chief Executive of Transnet.
In addition to the corporate loan, the African Development Bank is contemplating two targeted grants, including $750,000 in technical support from the Sustainable Energy Fund for Africa (SEFA) – a multi-donor fund administered by the bank – to improve energy efficiency and associated measures, in line with Transnet’s net zero plan.
The second grant funding comprises $1 million 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.
