Our Correspondent | Africa Guardian
South Africa’s state-owned logistics company, Transnet, has secured a R5 billion ($283.53 million) loan from the New Development Bank, established by the BRICS group of emerging economies. The South African government will guarantee this loan, which is aimed at supporting Transnet’s ambitious turnaround plan.
The loan is intended to address the years of underinvestment that have undermined Transnet’s ability to provide reliable freight rail and port services. These challenges have significantly impacted commodity exports and other sectors, including manufacturing and retail, weakening South Africa’s economic position.
Transnet’s Chief Executive, Michelle Phillips, explained that the funds will be used to implement a turnaround strategy that involves restructuring the company. This plan includes splitting the freight rail subsidiary into two separate entities: an infrastructure management company and an operating unit. Additionally, the strategy aims to reduce port backlogs and make another attempt to open parts of its rail network to private operators, following a previous unsuccessful effort two years ago.
“There is a lot of work to be done at Transnet, and we have major challenges. We need to sort it out, and that’s what we need the money for,” said Phillips after the loan agreement signing ceremony.
Earlier this year, Transnet also secured a $1 billion loan from the African Development Bank (AfDB) to further support its recovery plan.
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