Transnet Secures €300m French-Backed Funding to Accelerate Decarbonisation and Strengthen SA’s Trade Competitiveness
South Africa’s state-owned logistics company, Transnet, has announced a major partnership with the French Development Agency (AFD), backed by the European Union (EU), to advance its decarbonisation strategy and modernise the country’s critical trade infrastructure. The agreement, unveiled on the sidelines of the G20 Summit in Johannesburg, is positioned to strengthen South Africa’s role in global supply chains and improve the efficiency of trade flows with its major partners.
The initiative includes a proposed €300 million (R6 billion) sustainability-linked loan from AFD to support Transnet’s transition toward net-zero emissions. Disbursement will be tied to specific performance targets, including the shift toward renewable energy consumption and diversification into transition minerals—sectors that are central to South Africa’s long-term export growth.
Transnet Chief Executive Michelle Phillips said the support comes at a pivotal moment for the organisation.
“The funding package from AFD will assist us in revitalising our infrastructure while supporting the clean energy initiatives under the capital investment programme. In addition, this initiative will contribute significantly to supporting Transnet’s decarbonisation journey while actively exploring the company’s strategic role and potential opportunities within the green hydrogen value chain,” she said.
Strengthening Rail and Port Capacity for Trade
A core component of the partnership aims to shift freight volumes from road to rail — a long-standing priority for exporters and importers facing rising logistics costs. The French-backed programme includes rehabilitation of 550 km of rail, improvements in reliability, and upgrades across several port facilities.
These measures are expected to improve service quality and competitiveness across the logistics network, helping to restore the efficiency required for South Africa to maintain strong trading relationships with the EU, China, the United States, and regional partners.
AFD CEO Rémy Rioux emphasised Transnet’s importance in the country’s low-carbon transition and in enabling international commerce.
“Transnet is a long-standing partner of AFD and is a key actor in South Africa’s low-carbon transition. Our support will enable Transnet to pursue opportunities that will emerge from the green hydrogen economy, contribute to the modernisation of its operations and reduce its environmental footprint,” he said.
The loan forms part of France’s commitment to the Just Energy Transition Partnership (JETP), fulfilling a portion of the €1 billion pledge announced at COP26 to support South Africa’s shift to a cleaner energy system.
EU Grant to Advance Green Hydrogen Strategy
Complementing the AFD loan, the EU has provided a €7 million (R140 million) grant to help develop Transnet’s green hydrogen strategy—seen as a cornerstone of South Africa’s future export landscape.
The funding will support feasibility studies, impact assessments, pilot projects, and technical assistance across ports, rail, pipelines, and logistics facilities. As global demand for low-carbon hydrogen grows, South Africa aims to position itself as a competitive exporter, leveraging its renewable resources and strategic geographic location.
EU Commissioner for International Partnerships, Jozef Síkela, noted the importance of aligning infrastructure investment with long-term trade and climate goals.
“Through our Global Gateway investment strategy, the EU is supporting concrete investments in South Africa’s green hydrogen economy—investments that cut emissions and create high-quality jobs. With its central role in rail, ports and pipelines, Transnet is essential to building a credible and scalable hydrogen ecosystem,” he said.
“This partnership will help deliver the expertise and infrastructure needed for South Africa’s 2050 net-zero goals.”
Why This Matters for South Africa’s Trade Future
Transnet is the backbone of South Africa’s export-driven economy, moving bulk commodities such as coal, iron ore, manganese, and agricultural products that underpin the country’s trade balance. Chronic underinvestment, operational challenges, and infrastructure constraints have resulted in declining freight volumes and disrupted supply chains—affecting manufacturers, miners, and small exporters alike.
This new partnership signals a renewed effort to stabilise and modernise the logistics system while aligning it with international sustainability commitments. Improved reliability across ports and rail corridors is expected to:
- Reduce turnaround times for exporters
- Lower logistics costs
- Strengthen South Africa’s trade competitiveness
- Support regional integration efforts
- Build confidence among global trading partners
By linking infrastructure modernisation with green energy initiatives, the initiative positions South Africa’s trade corridors for long-term resilience in a low-carbon global economy.
