South Africa Boosts Guarantees for Transnet Turnaround

South Africa's government has approved R94.8 billion (about $5.3 billion) in guarantees for state-owned rail and port operator Transnet, supplementing a R51 billion guarantee approved in May. Of the new amount, R48.6 billion will cover all debt redemptions over the next five years, and R46.2 billion will mitigate risks from further credit rating downgrades. This move aims to stabilize Transnet amid severe operational inefficiencies, mounting debt, and revenue losses for exporters caused by rail and port disruptions. The new support is part of a broader turnaround strategy, which includes efforts to restore freight volumes and introduce greater private sector participation. Transnet's challenges have been attributed to years of underinvestment, equipment shortages, and widespread vandalism, significantly impacting South Africa’s logistics and export sectors. Ratings agencies have cautioned that Transnet remains highly dependent on government support, making near-term upgrades unlikely.