South Africa’s state-owned logistics group, Transnet, has secured substantial financial backing from European institutions, formalizing two key loan agreements totaling €650 million to tackle critical infrastructure inefficiencies and support the country’s green energy transition.

The financing, announced by Deputy President Paul Mashatile, comes amid severe economic losses linked to grid failures and operational backlogs plaguing South Africa’s freight and port network.

This pivot toward Europe follows ongoing trade and policy disputes with the United States.

The first major injection is a €300 million loan from the AFD Group, France’s development agency.

This funding, formalized during a visit by French President Emmanuel Macron, is specifically earmarked for critical infrastructure upgrades and Transnet’s shift toward renewable energy usage.

The loan disbursements are strategically tied to Transnet achieving specific sustainability targets.

Projects include the rehabilitation of 550 kilometres of railway and the modernization of key port facilities, all aimed at fostering a crucial shift from road to more efficient, lower-emission rail transport.

In a complementary development, Transnet also signed a €350 million loan agreement with EIB Global, the development arm of the European Investment Bank.

This EIB financing is further supported by a €21 million grant from the European Union, advancing South Africa’s participation in the Just Energy Transition Partnership (JET-P).

This capital will be utilized for the modernization of port and rail infrastructure, the development of nascent green hydrogen facilities, and the promotion of cleaner transport solutions across the network.

Analysts view this dual European financing—comprising the French AFD loan and the EIB Global package—as a strong indicator of South Africa’s strategic pivot toward the EU for crucial development funding.

This strategy aims to diversify international collaborations while directly addressing the severe capacity constraints that have stymied the country’s export potential and hampered cross-border trade with neighboring countries like Eswatini.

The investments promise to reduce emissions, lower freight costs, and strengthen both domestic and regional connectivity.

SOURCE: BUSINESS INSIDER AFRICA