The African Development Bank said on Thursday it had approved a $1 billion loan to South Africa’s state-owned railway and ports company, Transnet.
The 25-year loan is fully guaranteed by the South African government and will help finance the first phase of an $8.1 billion investment plan for Transnet to improve the country’s rail and port infrastructure, the bank said.
South Africa has Africa’s most industrialised economy, but its deteriorating railways and ports are seen as a major barrier to investment by foreign companies and have strangled the efficiency of its export market . Transnet is also one of several state-owned companies that have come under scrutiny for corruption and mismanagement.
In a statement released by the bank, Transnet Group Chief Executive Michelle Phillips said the loan would make “a significant contribution to Transnet’s investment plan to stabilise and improve the rail network and contribute to the wider South African economy” .
Reviving South Africa’s stagnant economy and reducing high unemployment rates is a top priority for President Cyril Ramaphosa , whose party, the African National Congress , was punished by voters in May’s elections when it lost its 30-year majority and was forced to share power in a new coalition government .