The African Development Bank (AfDB) has approved a senior loan of up to $400 million (over R3 billion) to South Africa’s logistics and transport parastatal Transnet on Friday.

The AfDB said in a statement the loan would contribute to the financing of Transnet's five year R93.4 billion capital investment programme.

According to the AfDB, the programme would allow the parastatal to "revitalise and expand vital rail infrastructure."

Transnet's Investment Program will allow the company to revitalize and expand vital rail infrastructure. By increasing capital investments, recapitalization and rehabilitation of key freight and logistics equipment and infrastructure, Transnet will contribute to reducing the cost of doing business in South Africa to internationally competitive proportions, the company said in a statement.

The loan will work towards stimulating trade, boosting sustainable economic growth, and facilitating regional integration. It also aims to support local suppliers and increase their competitiveness.

"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 stamen read.

The AfDB said it looked forward to Transnet increasing its regional footprint. "By improving the South African transportation network, regional trade and integration will be facilitated,” AfDB said.

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