African Development Bank loans Transnet $1bn

The African Development Bank (AfDB) has approved a $1 billion loan for South Africa's troubled logistics firm Transnet as part of its recovery plan. The loan, aimed at aiding Transnet's recovery and refurbishment efforts, comes at a crucial time for the company. Speaking to CNBC Africa, Solomon Quaynor, Vice President for Private Sector, Infrastructure, and Industrialisation at the African Development Bank, highlighted the challenges Transnet has faced in recent years. These challenges include vandalism of rail infrastructure, governance issues preventing the purchase of rolling stock, and a decline in operational efficiency. Quaynor emphasized the importance of Transnet in South Africa's transport and logistics infrastructure, underscoring its critical role in supporting the industrial base not only in South Africa but also in the sub-region. Transnet has a five-year recovery and capital investment program totaling $8 billion. The AfDB's support will focus on the near-term recovery plan to demonstrate operational efficiency improvements. The loan, backed by a sovereign guarantee, is a significant commitment from the AfDB, given Transnet's operational challenges and the size of the loan. Quaynor explained that the AfDB's support aligns with the reforms planned by the government, including the establishment of a National Crisis Committee overseeing the transport and logistics sector. Quaynor also addressed concerns about the loan negotiation process, clarifying that the focus was on supporting Transnet's recovery program, which accounts for $2.5 billion of the total capital investment plan. The AfDB, along with local financial institutions, aims to support Transnet in generating cash flows for the remaining capital investment over the next five years. Looking ahead, Quaynor highlighted the potential for private sector involvement in Transnet's operations, particularly through open access planned in the rail network and concession arrangements in port operations. The AfDB is open to funding private sector players operating within Transnet's network to enhance operational efficiency. Regarding the broader African industrialization agenda, Quaynor outlined the AfDB's strategic focus on key sectors such as agri-processing, minerals, the fourth industrial revolution, and pharmaceutical value chains. Supporting SMEs in industrial value chains is crucial for job creation and economic growth across the continent. In conclusion, Quaynor expressed confidence in the reforms initiated by the government and Transnet to address operational inefficiencies and enhance accountability. The AfDB stands ready to support the implementation of these reforms and promote industrialization and job creation in Africa.