Completed Commercial AidData Chinese Aid

ICBC provides ZAR 4 billion loan to Transnet for operating expenses

$4M USD

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Transnet SOC Ltd
Country	South Africa
Start Date	Jul 24, 2018
End Date	Oct 23, 2030
Duration	4,474 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`58607`

Grant Description

ICBC provides ZAR 4 billion loan to Transnet for operating expenses On July 24, 2018, during a meeting between the South African President Cyril Ramaphosa and the Chinese President Xi Jinping, the Industrial and Commercial Bank of China (ICBC) signed an agreement with President Ramaphosa to give a loan worth ZAR 4 billion (about $300 million) to Transnet, a state-owned rail, port, and pipeline company in South Africa.

The proceeds of the loan were to be used by the borrower for short-term liquidity purposes (i.e. to cover its general operating expenses as well as some capital expenditures). The loan has a maturity of five and a half years. The Government of South Africa issued a sovereign guarantee in support of the loan.

President Cyril Ramaphosa stated the facility was a ‘rand-denominated, quarterly amortising loan, at a floating and competitive interest rate,’ although the precise interest rate was never made public. No additional information about project implementation or use of the loan proceeds has been made public.

Transnet’s annual financial statements report from 2019 shows that the ICBC loan had achieved a 95% disbursement rate by the end of 2019 (ZAR 3.8 billion out of ZAR 4 billion).

The loan's (principal) amount outstanding was ZAR 0 in 2018, ZAR 3.8 billion in 2019, ZAR 1.2 billion in 2020, ZAR 2 billion in 2021, ZAR 1.2 billion in 2022, ZAR 400 million in 2023, and ZAR 0 in 2024.

📋 Staff Comments

In the Chinese Loans to Africa Database produced by SAIS-CARI and Boston University, the loan commitment year is identified as 2019 rather than 2018. This issue warrants further investigation.
Prior to issuing the loan, ICBC provided a term sheet (TS) to Transnet that indicated its willingness to issue a ZAR-denominated loan at a floating market interest rate plus 275 basis points (see http://www.treasury.gov.za/comm_media/press/2018/Final%20Report%20-%20National%20Treasury%20-%20Mckinsey%20Regiments%20Trillian%2015112018.pdf). For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.

📚 Sources & References

China's ICBC gives South Africa's Transnet $300 million loan during Xi visit
习近平访南非投资140亿美元
Ramaphosa lifts veil on some Eskom-China loan details
China’s ICBC gives Transnet R4bn loan during Xi visit
President Cyril Ramaphosa Oral Replies in the National Council of Provinces - 11 September 2018
SAIS-CARI Loans China
President #Ramaphosa: Transnet recently secured a R4 billion loan from the Industrial and Commercial Bank of China
SA President to discuss China loans, land expropriation
Question NW295 to the President of the Republic
Ramaphosa lifts veil on some Eskom-China loan details
Eskom and Transnet to get China funding
Eskom mandate and China loan bring hope for SA
Annual Financial Statements 2021
CHAPTER II: MCKINSEY
TRILLIAN AND REGIMENTS, 8.625% First Priority Senior Secured Notes due 2020
Annual Financial Statements 2020
Annual Financial Statements 2019
Transnet AFS 2022.pdf
Transnet 31 March 2023 final AFS.pdf, 31 March 2024 AFS.pdf Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.

All Grantees

Transnet SOC Ltd

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