Will Africa's new ports boost trade? New ports are being built and existing facilities are being improved and expanded across the continent.

Author:Raji, Rafiq
Position:INFRASTRUCTURE
 
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According to the recent PwC report Strengthening Africa's Gateways to Trade it is 1.5 to 3.5 times more expensive to ship a container from Africa than it is on comparable routes between other continents. Small shipment sizes are one reason why. Dwell times (the time goods spend at a port without moving) are another. Some of these inefficiencies are due to inadequate infrastructural and human capacity; well-run African ports outside of South Africa tend to be those run by foreign-owned concessions.

Were African ports to become more efficient, the cost of African goods exports and imports could be cut by more than half, research shows. Higher volumes per port could be a solution. Economies of scale via regional hub ports with shipping volumes of more than 2m 20-foot equivalent units (TEUs) per annum would reduce transport costs and make African goods more competitive. That is the thinking of PwC, at least.

Shipments to West Africa, say, would go to one hub port, from where smaller ships and/or inland road and rail infrastructure would be used to transfer the containers to neighbouring countries. PwC believes these regional hub container ports are likely to be those in Durban (South Africa), Abidjan (Cote d'Ivoire) and Mombasa (Kenya). Currently, only the port of Durban, which handles more than 2.5m TEUs, qualifies as one. There would eventually be other regional hub port contenders, though.

The Chinese factor

There has been increased investment in African ports lately, amounting to about 10% of the global total according to PwC. Most are to improve existing port facilities in addition to better managing them via concessions. There are also a few planned greenfield investments. Considering the continent's contribution to global trade growth has been below 1% over the past three decades, the increased interest seems a little counterintuitive. But that would hardly change if what are mostly inefficient African ports are not revamped.

African governments certainly now see the need to so. Not that they failed to before, but with so many demands on the public purse, supposedly self-funding ports were not a priority. So what changed? "There are a combination of factors at work," suggests John Ashbourne, Africa economist at London-based Capital Economics, "but a key one is the large pool of Chinese capital that is targeting infrastructure programmes abroad. While France remains a dominant player in West Africa, a lot of the big schemes elsewhere (in...

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