AfDB Approves $1 Billion Loan for Transnet's Recovery Plan

The African Development Bank (AfDB) has sanctioned a $1 billion loan to assist South Africa's Transnet. This funding aims to support Transnet's recovery, addressing equipment shortages and maintenance backlogs, which have hurt various sectors. The government-guaranteed loan is part of a broader five-year capital investment initiative.

The African Development Bank (AfDB) has approved a $1 billion loan for South Africa's Transnet, aiming to support the logistics firm's recovery plan. Both the bank and the company confirmed this on Thursday.

State-owned Transnet has faced challenges in providing adequate freight rail and port services due to long-standing equipment shortages and maintenance backlogs following years of under-investment. This shortfall has impacted South Africa's commodity exports and other sectors like manufacturing and retail, weakening the economy.

In a joint statement, Transnet and the AfDB noted that the 25-year loan is fully guaranteed by the South African government. The loan will fund the initial phase of Transnet's ZAR 152.8 billion ($8.1 billion) five-year capital investment plan to enhance its existing capacity ahead of future expansions along the transport value chain.

Transnet's recovery strategy, unveiled in October 2023, aims to restore freight volumes and return the company to profitability within 18 months.

(With inputs from agencies.)