Johannesburg - The African Development Bank (AfDB) has approved a senior loan of up to $400m (over R3bn) to logistics and transport parastatal Transnet.
In a statement on Friday, the AfDB said the loan would contribute to the financing of Transnet's five year R93.4bn capital investment programme.
According to the AfDB, the programme would allow the parastatal to "revitalise and expand vital rail infrastructure."
By increasing capital investments, recapitalisation and the rehabilitation of key freight and logistics equipment and infrastructure, Transnet would contribute to reducing the cost of doing business in South Africa to internationally competitive proportions, the AfDB added.
This would stimulate trade, boost sustainable economic growth, and facilitate regional integration.
"It also aims to support local suppliers and increase their competitiveness."
The AfDB said the loan would go towards the financing of Transnet Rail's capitalised maintenance plan, which formed part of the investment programme.
"The programme addresses South Africa's freight logistics strategy of creating capacity ahead of demand through improvements to freight transportation infrastructure."
The successful turnaround of the company laid the foundation for the current growth strategy with an overarching theme of improvement in customer service, volume growth and provision of capacity.
"It is expected that the scope, integration, and reliability of infrastructure coverage and services will greatly improve as a result of the investment programme with significant increase in operational efficiency and productivity in all of Transnet's business areas."
The AfDB said it looked forward to Transnet increasing its regional footprint.
"The project is well-aligned to South Africa's national priorities and the Bank's country assistance, regional integration, and the private sector strategies."
The AfDB added that its participation Transnet's investment programme would provide direct support for infrastructure development, which was a key focal area for the institution.
"By improving the South African transportation network, regional trade and integration will be facilitated."