African Development Bank Approves R18.85 Billion Loan For Transnet

The African Development Bank Group approved a R18.85 billion ($1 billion) loan to rebuild Transnet as it struggled with issues in its rail and port operations due to lack of investment in infrastructure and equipment, theft, vandalism, floods and the COVID-19 pandemic.

Michelle Phillips, Group Chief Executive of Transnet, hailed the African Development Bank's support, saying that the loan given by the bank will help Transnet to stabilize and improve the rail network.

Furthermore, Phillips also said that this 25-year loan will contribute to the broader South African economy, adding that "the accompanying grant funding to the loan will also greatly assist Transnet with its energy efficiency efforts and with Infrastructure Project Preparation initiatives," SA News reported.

The loan was approved by the African Development Bank Group's Board of Directors on July 12 and it is fully backed by the South African government. It will support the first part of Transnet's R152.8 billion ($8.1 billion) five-year plan to upgrade its current facilities and prepare for future expansion in key areas of the transport sector.

"The company is 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," Transnet and the African Development Bank said in a joint statement.

Transnet started a recovery plan in October last year to fix its infrastructure and quickly restart operations over the next 18 months. The plan aims to improve performance and increase freight volumes to better meet customer needs.

African Development Bank's Vice President for Private Sector, Infrastructure and Industrialization Solomon Quaynor said Transnet plays an "indispensable role" in the economy of South Africa as it ensures a competitive freight system and serves as a gateway to the Southern African Development Community (SADC) region.

"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," Quaynor added.

Transnet is the African Development Bank's client since 2010 and the company consists of more than 50,000 employees.

The company made headlines last week when it took disciplinary action against Transnet National Ports Authority (TNPA) Chief Executive Pepi Silinga alongside several managers following a probe into allegations of impropriety within the organization.