CAPE TOWN, South Africa (AP) — The African Development Bank said Thursday it has approved a $1 billion loan to South Africa’s state-owned railway and ports operator Transnet.
The 25-year loan was 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 ailing rail and port infrastructure, the bank said.
South Africa has the most industrialised economy in Africa, but its deteriorating railway and ports are seen as major barriers to foreign business investment and have stifled the efficiency of its export market. Transnet is also one of several state-owned enterprises that have previously come under fire for corruption and mismanagement.
In a statement from the bank, Michelle Phillips, CEO of Transnet Group, said the loan would “make a significant contribution to Transnet’s capital investment plan to stabilise and improve the rail network and contribute to the broader South African economy.”
Stimulating South Africa’s flagging economy and reducing sky-high unemployment are top priorities for President Cyril Ramaphosa. His African National Congress party was punished by voters in May’s election when it lost its 30-year majority and was forced to share power in a new coalition government.
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