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Compiled by Devina Haripersad

Senior Business/Finance journalist

Brics Bank to propel SA rail upgrade with huge loan to Transnet

The NDB wants to beef up its existing portfolio of R105.5 billion in South Africa before the end of the year.

The New Development Bank (NDB), backed by Brics nations, is set to grant a massive R18 billion loan to Transnet.

According to the bank, this loan will be used to revamp Transnet’s locomotives and supercharge the efficiency of rail routes.

The move by the NDB, headquartered in Shanghai, China, is said to be all about beefing up its existing portfolio of $5.6 billion (R105.5 billion) in South Africa before the year wraps up.

Since its start in 2015, the NDB has provided financial support to emerging economies.

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Business Day reported that as a result of contributions from Brazil, Russia, India, China, and South Africa – each holding a 20% stake – the NDB has expanded its reach.

Growing global influence

In 2021, the bank welcomed new members like Bangladesh, Egypt, United Arab Emirates, and Uruguay, showcasing its growing global influence.

“Transnet’s upgrade, fuelled by the R18 billion loan, is a focal point. Plus, we’re considering another substantial loan for water and sanitation,” said Vladimir Kazbekov, COO of the NDB.

The South African government will likely back the debt in line with the NDB’s rules.

Just last week, the NDB raised R1.5 billion ($94 million) in its first-ever South African bond auction. The demand surpassed R2.5 billion, prompting an expansion of the auction.

Smart allocation saw 71% of auctioned bonds go to institutional investors, while local banks snagged the rest. Leslie Maasdorp, NDB’s CFO and Vice-President, explained: “We want to strengthen our presence in member countries’ local markets to fund local currency loans.”

He said these funds will go to South African projects for sustainable development and infrastructure.

Renewable energy projects

A core focus for the NDB is to lend more in member nations’ own currencies. The bank said that this aligns with the auction’s aim of boosting renewable energy projects, aligning with South Africa’s quest for secure energy sources (when the NDB lends money in a country’s own currency, it can make it easier for that country to invest in projects that are essential for its development, such as renewable energy initiatives).

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Though the NDB has been a supporter of South African state-owned companies, especially Eskom, and independent power producers through partners like the Development Bank of Southern Africa and the Industrial Development Corporation, energy has taken centre stage.

“Our priority is to help the country bounce back from its energy struggles,” said Maasdorp.

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