UAE-based African Rail is raising $170 million to run freight trains on South Africa's broken rail network

South Africa has one of Africa's largest rail networks and some of its worst freight performance. Youssef Elgonaid has been waiting for an opening, and one has finally arrived.

African Rail Co., the UAE-based rail logistics company Elgonaid leads as chief executive officer, is raising approximately $170 million in 2026 to purchase locomotives and wagons for operations on South Africa's freight rail network, Bloomberg reported April 30. The company is among 11 private operators that received conditional access to the Transnet rail network in August 2025, part of South Africa's push to break a state monopoly that has constrained the economy for over a decade.

The fundraise is structured at roughly 30% equity and 70% debt. Potential backers include private equity firms, primarily from the Middle East, shipping companies and development finance institutions. No specific investors have been named. The company plans to procure approximately 15 locomotives and 250 wagons over the medium term, with initial operations expected to launch using existing and refurbished rolling stock, augmented by leased equipment while new assets arrive.

ARC will operate on two key corridors. The first runs from South Africa's northeastern border to Mozambique, carrying fuel on a route the company already knows well. The second links Gauteng, the country's commercial hub, to the port of Durban, which handles the bulk of South Africa's container traffic. A third corridor will carry copper from mines in the Democratic Republic of Congo to the port of Maputo in Mozambique, extending the company's reach into the regional mineral supply chain.

Elgonaid made the commercial logic plain. "Rail is the only viable overland solution for these corridors," he said. ARC has spent more than a decade operating rail logistics in Mozambique, Zimbabwe and Botswana, where it became the largest rail mover of diesel, petrol and other fuels. South Africa is the same model applied to a much larger network. "We expect to see similar patterns in South Africa, but on a much bigger scale, to what we have experienced over the past decade," Elgonaid said.

The backdrop to the fundraise is a decade of Transnet underperformance that has cost South Africa billions in lost export revenue and competitiveness. The state logistics company manages both the rail network and the country's main ports, and bottlenecks across both systems have been ranked among the worst globally by the World Bank. Mining companies, retailers and agricultural exporters have watched cargo pile up at ports and on roads as rail capacity collapsed. Private sector access was the government's answer, and ARC's $170 million raise is the clearest signal yet that serious capital is prepared to back that reform.

ARC recently also signed a concession deal linked to billionaire Enrique Razon's International Container Terminal Services Inc. to expand Durban's main container terminal, a project that addresses port-side inefficiencies alongside the rail-side improvements the company is now funding.

One structural issue remains under negotiation. Elgonaid noted that Transnet Rail Infrastructure Manager still charges access fees even when a line is disrupted or closed, without any obligation to compensate operators for those disruptions. ARC expects those terms to evolve as the regulatory framework matures. The company is not waiting. Operations on the first corridors are targeted between the third quarter of 2026 and the first quarter of 2027.