Transnet, a troubled South African logistics company, has been approved for a $1 billion loan by the African Development Bank. The bank and Transnet announced this on Thursday.

Transnet, the state-owned company in South Africa, has struggled with providing adequate rail freight and port services due to equipment shortages. Maintenance backlogs have also been a problem after years of underinvestment.

It has affected commodity exports as well as other sectors, such a manufacturing and retail. This has led to the weakening of Africa's most developed economy.

Transnet and AfDB stated in a joint press release that the loan of 25 years was fully guaranteed by South Africa's government.

The statement stated that the investment would help the company to implement the first phase in its five-year capital plan of ZAR 152.8 billion Rand ($8.1 billion), which aims to increase the capacity of its current segments and expand them for priority segments along the entire transport value chain.

Transnet, with 130 billion rand of debt, lost 1.6 billion rand over the six-month period ending September 30 due to declining rail, pipeline and port volumes, as well as increased costs.

The freight volume has declined to 150 millions metric tons from 226 million tonnes in the financial year 2017/18.

Transnet’s recovery plan announced in October 2023 aims to return the company's profitability and restore its freight volume over a 18-month period.

The turnaround plan calls for splitting up the freight rail division into two separate companies - an Infrastructure Management Company and an Operating Unit. The turnaround plan also aims to reduce port backlogs, and plans to try again to open parts of the rail network to private operators following a failed attempt two years ago.