South Africa’s state logistics company, Transnet, has secured a 5 billion rand ($283.53 million) loan from the New Development Bank, established by the BRICS group of emerging economies, Reuters reported.
The South African government will guarantee the loan, according to Director General Duncan Pieterse, who shared the news during a New Development Bank meeting in Cape Town.
Transnet, burdened with about 130 billion rand in debt, has faced challenges in delivering reliable freight rail and port services due to equipment shortages and maintenance delays, the result of years of underinvestment.
This has negatively impacted commodity exports and other sectors such as manufacturing and retail, weakening Africa’s most advanced economy.
Transnet’s Chief Executive, Michelle Phillips, stated that the 5 billion rand loan from the BRICS New Development Bank will be directed towards the company’s turnaround plan.
The turnaround plan includes splitting the freight rail subsidiary into two – an infrastructure management company and an operating unit. It also targets reduced port backlogs and plans another attempt to open up parts of its rail network to private operators after a false start two years ago.
“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,” Transnet CEO Michelle Phillips said after a signing ceremony for the loan agreement.
In July, the African Development Bank (AfDB) also approved a $1 billion loan for South Africa’s Transnet to aid the troubled logistics firm’s recovery plan.
