Transnet in South Africa earns $1 billion. Loan from the African Development Bank

According to a statement released on Thursday by the bank and the company, Transnet, a struggling logistics company in South Africa, has been granted a $1 billion loan by the African Development Bank (AfDB) to support its recovery strategy.

After years of underinvestment, state-owned Transnet has failed to deliver sufficient freight rail and port services in South Africa due to equipment shortages and maintenance backlogs.

Africa’s most developed economy has been weakened as a result, particularly in the manufacturing and retail sectors and with commodity exports.

In a joint statement, Transnet and the AfDB declared that the South African government fully guaranteed the 25-year loan.

“It will facilitate the first phase of the company’s ZAR 152.8 billion rand ($8.1 billion) five-year capital investment plan to improve its existing capacity ahead of expansion for the priority segments throughout the transport value chain,” stated the statement.

Transnet, which owes 130 billion rand, lost 1.6 billion rand in the six months ending on September 30 due to decreased rail, port, and pipeline volume as well as increased expenses.

Freight volumes decreased from 226 million metric tons in the 2017–18 fiscal year to 150 million metric tons in the 2022–2023 fiscal year.

Transnet’s 18-month recovery plan, which was unveiled in October 2023, aims to increase freight volumes and bring the business back to profitability.

The freight rail business will be divided into an operating entity and an infrastructure management firm as part of the turnaround plan. Along with reducing port backlogs, it also intends to try again, following a botched attempt two years prior to allow private operators to access portions of its rail network.