A road to recovery open to Transnet?

The African Development Bank (AfDB) has approved a US$1bn corporate loan to Transnet, a major freight transport and logistics company in South Africa

The company has faced significant operational challenges over the last few years and has been an ever-present stay in media headlines due to underinvestment in infrastructure and equipment, theft and vandalism, and external shocks (such as floods) that have affected critical rail and port businesses.

It has now committed to addressing these past challenges, fostering integrity and enhancing efficiency. This is being pursued, primarily, through its recovery plan that was launched in October 2023 that seeks to rehabilitate infrastructure and accelerate the relaunch of operations over 18 months. Restoring operational performance and freight volumes to meet customer demands has been recognised as a priority.

Vital AfDB support

In order to assist with these recovery and growth plans, AfDB has now committed to a US$1bn corporate loan to Transnet. The 25-year loan – fully guaranteed by the Government of South Africa – will facilitate the first phase of the company’s US$8.1bn five-year capital investment plan.

“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,” commented 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, 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 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.”