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Tunis, 23 June 2010 - The Board of Directors of the African Development Bank (AfDB) approved today, 23 June 2010, a senior loan up to USD 400 million as a contribution to the financing of Transnet’s five-year R93.4 billion Capital Investment Program (Investment Program).
Transnet’s Investment Program will allow the company to revitalize and expand vital rail infrastructure. By increasing capital investments, recapitalization and rehabilitation of key freight and logistics equipment and infrastructure, Transnet will contribute to reducing the cost of doing business in South Africa to internationally competitive proportions, thereby stimulating trade, boosting sustainable economic growth, and facilitating regional integration. It also aims to support local suppliers and increase their competitiveness.
The AfDB loan will go towards the financing of Transnet Rail’s capitalized maintenance plan which forms part of the Investment Program. The Investment Program addresses South Africa’s Freight Logistics strategy of creating capacity ahead of demand through improvements to freight transportation infrastructure.
The successful turnaround of the company laid the foundation for the current growth strategy; “The Quantum Leap” with an overarching theme of improvement in customer service, volume growth and provision of capacity. It is expected that the scope, integration, and reliability of infrastructure coverage and services will greatly improve as a result of the Investment Program with significant increase in operational efficiency and productivity in all of Transnet’s business areas. The Bank looks forward to Transnet increasing its regional footprint.
The project is well aligned to South Africa’s national priorities and the Bank’s Country Assistance, Regional Integration, and the Private Sector Strategies. The Bank’s participation in the Transnet Investment Program will provide direct support for infrastructure development, which is a key focal area for the institution. By improving the South African transportation network, regional trade and integration will be facilitated.
To date, the Bank has approved a total of ten private sector operations amounting to approximately USD 1.6 billion in South Africa, and one regional project covering South Africa and Mozambique.