The African Development Bank (AfDB) has approved a loan of R18.5 billion ($1 billion) to assist Transnet in its recovery efforts, both the bank and the company announced on Thursday, July 18, 2024. Transnet has struggled with providing adequate freight rail and port services due to equipment shortages and maintenance backlogs stemming from years of under-investment. These issues have adversely affected commodity exports and various sectors such as manufacturing and retail, thereby weakening Africa’s most developed economy.
A Transnet Freight Rail train is pictured next to tons of coal mined from the nearby Khanye Colliery mine at the Bronkhorstspruit station, approximately 90 kilometers northeast of Johannesburg, South Africa, on April 26, 2022. REUTERS/Siphiwe Sibeko/File photo
In a joint statement, Transnet and the AfDB mentioned that the 25-year loan is fully guaranteed by the South African government.
“This loan will support the first phase of Transnet’s R152.8 billion ($8.1 billion) five-year capital investment plan, aimed at enhancing its current capacity before expanding priority segments throughout the transport value chain,” the statement read.
Transnet, which is burdened with debts amounting to R130 billion, reported a loss of R1.6 billion for the six months ending on September 30, primarily due to declining rail, port, and pipeline volumes along with rising costs.
Freight volumes have dropped from 226 million metric tonnes in the 2017/18 financial year to 150 million metric tonnes in 2022/23.
Transnet’s recovery strategy, announced in October 2023, aims to restore freight volumes and return the company to profitability within 18 months.
The turnaround plan includes splitting the freight rail subsidiary into two entities—an infrastructure management company and an operating unit. It also focuses on reducing port backlogs and includes another attempt to open parts of its rail network to private operators following a failed attempt two years ago.
