The New Development (Brics) Bank has approved a R5bn loan to Transnet to support the freight rail sector, the bank disclosed at its AGMs in Cape Town on Friday.
The loan, guaranteed by the government, will add to the $5.8bn (about R102bn) in concessional loans that the bank has already advanced to SA over the past five years. It is also one of the first to be made in rand, rather than dollars, in line with the NDB’s aim to do about 30% of its lending in local currency.
The loan comes at a time when Transnet, which is due to report its annual financial results on Monday, is struggling with a R130bn debt burden. Though the Treasury made a R47bn guarantee facility available to it in December, Transnet has repeatedly asked the government for an equity bailout as well.
Transnet CEO Michelle Phillips and NDB president Dilma Roussef signed the loan agreement at the meetings, which opened in Cape Town on Thursday and continue until Saturday.
The bank, which has since its inception advanced about $37bn of low interest development loans to its member countries, was established by the five original Brics member countries (Brazil, Russia, India, China and SA) in 2015. Its membership has since 2021 been expanded to include the UAE, Egypt and Bangladesh, but membership is now not identical with the Brics itself, which has been expanded with the addition of several new member countries, including Iran.
The bank has the advantage that its triple A credit rating enables it to raise funding on international markets at attractive rates, which it can pass on in the form of concessional rates to borrowers. NDB officials say several more countries are interested in joining the bank.
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