The African Development Bank (ADB) says it has approved a $1bn loan for South Africa’s state port monopoly to help fund its restructuring efforts.
The 25-year loan to Transnet SOC has been fully guaranteed by the South African government, the Abidjan-based lender said in a statement.
Transnet is working to reverse a collapse in its facilities that has hobbled economic growth in Africa’s most industrialised economy and cost the nation tens of billions of rand in lost trade.
ADB said the loan will facilitate the first phase of Transnet’s ZAR 152.8bn ($8.1bn) five-year capital investment plan to improve its existing capacity ahead of expansion for the priority segments throughout the transport value chain.
“Transnet has faced operational challenges mainly in the critical rail and port businesses resulting from underinvestment in infrastructure and equipment, theft and vandalism, and external shocks such as floods and the effects of the Covid-19 pandemic,” ADB said.
ADB said Transnet was “committed to addressing past challenges, fostering integrity, and enhancing efficiency within the organization”.
It has made progress in some key areas including reforms in governance procurement and financial management, the development bank added.
Transnet’s recovery plan, launched in October 2023, seeks to rehabilitate the infrastructure and accelerate the relaunch of operations over 18 months, focusing on restoring operational performance and freight volumes to meet customer demands.
ADB vice president for private sector, infrastructure and industrialisation Solomon Quaynor emphasised the significance of this support: “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 region.
“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,” he added.
Michelle Phillips, group chief executive of Transnet, said: “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.”
