The African Development Bank (www.AfDB.org) has released the first tranche of its $1 billion loan to Transnet, the South African state-owned conglomerate managing the country’s ports, railways and pipelines. This disbursement is the first in a series of four tranches planned for an unparalleled financing arrangement to support Transnet’s business’s recovery plan. 

Approved by the Bank’s Board of Directors five months ago, this funding underpins a recovery plan to address pressing operational challenges of the company, while bolstering South Africa’s critical infrastructure. 

The funding will allow Transnet to commence the first phase of its ambitious ZAR 152.8 billion (USD 8.1 billion) five-year investment plan to upgrade existing infrastructure while enhancing key logistic chain segments.  

“This swift disbursement shows the Bank’s commitment to the private sector in Africa, which is essential for supporting sustainable economic growth,” said Solomon Quaynor, Vice President for Private Sector, Infrastructure and Industrialization at the African Development Bank Group, speaking on the sidelines of the Africa Investment Forum 2024 Market Days in Rabat, Morocco.  

The efficiency of the disbursement reflects Transnet’s fulfilment of the Bank’s rigorous requirements for governance, the environmental stewardship, and social responsibility. Following the September 2023 signing of the loan agreement between Transnet and the African Development Bank in Johannesburg, the Bank committed to supporting Transnet’s recovery plan with targeted financing. 

Transnet has faced significant operational hurdles for several years, including under-investment, equipment theft, vandalism, flooding and the long-lasting impacts of  the Covid-19 pandemic. In response, the company has restructured and embarked on internal reforms to improve efficiency and management while committing to decarbonization and carbon footprint reduction initiatives. 

The African Development Bank commended the South African government’s dedication to restructuring Transnet and enhancing governance in the transport sector. Transnet has notably improved governance practices, particularly in tendering procedures and financial management, as part of its broader reform efforts. 

With over 30,000 kilometres of railway infrastructure -- the largest in any emerging economy -- Transnet plays a vital role in regional. Its railway network links South Africa’s ports with key regional partners, including Botswana, Zambia, Zimbabwe and the Democratic Republic of Congo, and supports operations at Durban, the fourth-largest container terminal in the southern hemisphere. 

The African Development Bank’s support for Transnet is therefore crucial for improving South Africa’s competitiveness and strengthening the continent’s economic integration, while responding to the challenges of the logistics sector, which is vital for Africa’s development.  

With this disbursement, the African Development Bank has once again demonstrated its agility in the financial support it provides to the African private sector.