New Development Bank injects R5 billion towards Transnet’s operations

The New Development Bank (NDB) has granted Transnet a R5 billion loan for the modernisation and improvement of South Africa’s freight rail sector.

The loan agreement was signed during the opening ceremony of the bank’s ninth Annual General Meeting in Cape Town today.

The NDB aims to assist BRICS member countries and other emerging markets to develop their economies by providing finance for infrastructure development projects.

This is the third loan that Transnet is getting from the NDB since 2016.

Finance Minister Enoch Godongwana, says South Africa is looking at the bank for assistance, particularly in the current slow economic growth climate.

“Infrastructure is an enormous economic multiplier, providing dividends for an economy long after the infrastructure has been built. We believe that the NDB’s activities in developing and emerging markets will assist in addressing the large infrastructure financing gap that has been impeding economic growth and development, particularly in Africa,” says Godongwana.

Meanwhile, the President of the New Development Bank, Dilma Rousseff, has expressed her concern about the high indebtedness of developing countries.

She delivered the keynote address at the ninth annual meeting of the bank.

The NDB is a facilitator of loans for infrastructure development for members of the BRICS countries and other emerging markets.

This year, new members, from the UAE, Egypt and Bangladesh also attended.

Rousseff says the challenges of developing countries are well known – which include inequality, extreme poverty and inadequate infrastructure – but she says the repayment of excessive debt can itself become a hindrance to development.

“For developing countries, indebtedness becomes an excessive burden. As we know, fiscal space is essential to ensure that governments can simultaneously invest in development actions, combat climate change, and achieve the Sustainable Development Goals (SDGs). Nevertheless, the debt of developing countries is growing too much and too fast. For instance, interest payments in developing countries have increased more quickly than public spending on infrastructure, health, education, and housing over the past decade,” Rousseff adds.

BRICS New Development Bank | Transnet receives R5-billion loan for freight rail infrastructure