South Africa’s state logistics company, Transnet, has obtained a 5 billion rand ($283.53 million) loan from the New Development Bank (NDB), established by the BRICS group of emerging economies.
The South African government will guarantee the loan, announced by Director General Duncan Pieterse during a New Development Bank meeting in Cape Town.
Transnet, which is grappling with approximately 130 billion rand in debt, has struggled with reliable freight rail and port services due to equipment shortages and maintenance delays stemming from years of underinvestment.
These challenges have adversely affected commodity exports and sectors such as manufacturing and retail, weakening Africa’s most advanced economy.
Transnet’s Chief Executive, Michelle Phillips, revealed that the loan will support the company’s turnaround plan. This plan includes splitting the freight rail subsidiary into two entities: an infrastructure management company and an operating unit.
It also aims to reduce port backlogs and make another attempt to open parts of its rail network to private operators following a previous unsuccessful attempt two years ago.
Phillips emphasized the need for the funds, stating, “There is lots of work to be done in Transnet; we’ve got major challenges. We need to sort it out and that’s what we need the money for.”
In addition to this loan, the African Development Bank (AfDB) approved a $1 billion loan for Transnet in July to further support its recovery efforts.
