AfDB Approves R18.85 Billion Loan for Transnet’s Recovery and Growth

Transnet Group Chief Executive Michelle Phillips expressed gratitude for the support, noting that the loan will significantly boost the company's capital investment plan.

The African Development Bank Group has sanctioned a R18.85 billion ($1 billion) corporate loan to Transnet to support its recovery and expansion initiatives. This funding comes as Transnet addresses significant operational challenges in its rail and port sectors, including underinvestment, theft, vandalism, and the impacts of recent floods and the COVID-19 pandemic.

Transnet Group Chief Executive Michelle Phillips expressed gratitude for the support, noting that the loan will significantly boost the company's capital investment plan. This investment aims to stabilize and enhance the rail network while contributing to South Africa's broader economic growth. Additionally, accompanying grant funding will aid Transnet’s energy efficiency efforts and infrastructure project preparation.

Approved on 12 July 2024 by the African Development Bank Group’s Board of Directors, the 25-year loan is fully backed by the South African government. It will finance the first phase of Transnet’s R152.8 billion ($8.1 billion) five-year capital investment plan, which focuses on upgrading existing capacity and preparing for future expansion across key transport segments.

The joint statement from Transnet and the African Development Bank highlighted the company’s commitment to overcoming past challenges and improving governance, procurement, and financial management. In October 2023, Transnet launched a recovery plan aimed at rehabilitating infrastructure and boosting operational performance and freight volumes over the next 18 months.

Solomon Quaynor, the African Development Bank’s Vice President for Private Sector, Infrastructure, and Industrialisation, emphasized the strategic importance of the partnership. He noted that the initiative aligns with South Africa’s "Roadmap for Freight Logistics System" and is overseen by the National Logistics Crisis Committee at the Presidency level. This collaboration is poised to enhance national logistics capabilities and drive sustainable economic growth.

Since 2010, Transnet has been a client of the African Development Bank. Employing over 50,000 people, Transnet is crucial to South Africa’s transport and logistics infrastructure, facilitating trade within the country and with neighboring landlocked nations such as Botswana, Zambia, Zimbabwe, and the Democratic Republic of Congo via the Port of Durban.