The African Development Bank Group has approved an R18.85-billion government-guaranteed corporate loan to Transnet to help fund its recovery and growth plans.
The 25-year loan, approved by the bank’s board of directors, will facilitate the first phase of Transnet’s R152.8bn five-year capital investment plan to improve its existing capacity. This phase takes place ahead of the logistics company’s expansion to cater for priority segments throughout the transport value chain.
Transnet has faced operational challenges, mainly in its critical rail and port businesses, following corruption during the years of state capture that led to underinvestment in infrastructure and equipment. It has also been affected by theft and vandalism, and external shocks such as floods and the effects of the Covid-19 pandemic.
As part of its turnaround plan, Transnet management has reiterated its commitment to confronting these past challenges, fostering integrity, and enhancing efficiency within the organisation.
African Development Bank vice president for private sector, infrastructure and industrialisation, Solomon Quaynor, said the loan signified the bank’s “commitment to enhancing national logistics capabilities and driving sustainable economic growth”.
“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,” Quaynor said.
“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,” he said.
In addition to the corporate loan, the 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.
Transnet group chief executive Michelle Phillips said the organisation appreciated the support demonstrated by the 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,” Phillips said.
“The accompanying grant funding to the loan will also greatly assist Transnet with its energy efficiency efforts and with infrastructure project preparation initiatives,” she said.
Transnet’s recovery plan, launched in October 2023, seeks to rehabilitate infrastructure and accelerate the relaunch of operations over 18 months, focusing on restoring operational performance and freight volumes to meet customer demands.
