The New Development Bank has signed a R5 billion loan with Transnet for freight rail modernisation, boosting operational performance and sustainability.
The New Development Bank has approved a R5 billion loan agreement with South Africa’s state-owned freight transport and logistics company, Transnet, to “support the modernisation and improvement of South Africa’s freight rail sector.”The NDB was created in 2015 by Brazil, Russia, India, China and South Africa who each contributed $2 billion to the bank’s equity capital and each own a 20% stake.
“This program is expected to restore freight rail volumes in South Africa, improving operational performance and reliability, and contributing to a sustainable future,” it added. According to a study by the GAIN Group, a boutique consultancy focusing on freight transport contract research, Transnet’s failures are estimated to cost the country R1 billion a day in economic output, equivalent to 4.9% of annual GDP or R353 billion.
Like other overly indebted state-owned entities, Transnet was allocated no bailouts for 2024/2025 as the Treasury continues its “tough love” approach and moves to reduce government debt and stabilise borrowing. NDB President Dilma Rousseff, said that the BRICS Bank is “delighted to partner with Transnet in this transformative initiative.”
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