Virtually every port in Sub-Saharan Africa has embarked on
elaborate initiatives to boost relatively low capacity, as demand for cargo
handling is expected to soar in the coming years with the growth of their
economies. It’s already estimated that the overall container demands in these
ports is expected to exceed the current total capacity between 2025 and 2030.
For instance, dry bulk-handling capacity gaps have started
to emerge. The Port of Mombasa is expected to reach 30 million tons by 2050,
and that of Dar es Salaam is estimated at 10 million tons and Durban at 5
million tons, according to a 2019 study by World Bank on eastern and southern
African ports. In the case of liquid bulk, the capacity is already stretched in
some ports. It is likely to be larger by 2050 in absolute terms at the Port of
Djibouti at 18 million tons, Mombasa Port at 20 million tons and Dar es Salaam
Port at 15 million tons.
This is what has spiked the infrastructural investment
overdrive in African ports as operators look to cut these gaps in technical
terminal operations. They form part of Africa’s current pipeline of $2.5
trillion worth of infrastructure projects expected to be complete by 2025.
These projects have also seen China’s infrastructure commitment to Africa grow
at an average annual rate of 10 percent from 2013 to 2017, according a McKinsey
analysis. Besides providing financial support, China has also providing the
much needed technical expertise in project execution, which could partly
explain the reason why it is behind Africa’s most ambitious infrastructural
developments.
These projects include the Horn of Africa’s new Djibouti
mega port, which was jointly financed by Djibouti Ports and Free Zones
Authority (DPFZA) and China Merchant Holding Company (CMHC). Chinese
contractors were also behind Africa’s first electrified cross-border railway, a
470-mile stretch connecting the Djibouti port with neighboring Ethiopia.
However, there is a caveat in these elaborate projects to
increase the maritime capacity of Africa’s ports. There are a number of factors
that can undermine the realization of the full benefit of these capacity
improvements, key among them being port competition. If overlooked, it can
subvert the strategic ambitions of the ports in vying for the coveted position
of transshipment and regional hubs in the respective areas they serve.
Geographically, Djibouti and Durban are best placed to
develop into regional and transshipments ports in Sub-Saharan Africa due to
their proximity to world’s major trading routes. Strategically located on the
Gulf of Aden and at the entrance of the Red Sea, Djibouti enjoys an
advantageous position along the main east-west shipping route and thus shipping
lines are able to transship containers into East Africa without a huge deviation
from their routes.
Currently, it acts as a gateway port for the neighboring
Ethiopia where 95 percent of its cargo is handled while the remaining one pass
through Mombasa and Port Sudan. However, port services competition in East
Africa and the Horn of Africa are expected to be stiff after the completion of
the $440 million Berbera port expansion in Somalia last month. The involvement
of DP World in the management of the 500,000 TEU capacity port is considered as
a factor that might woo shipping lines to import cargo through the port.
On the other hand, the development of Lamu port in Kenya is
expected to capture cargo for Southern Ethiopia through the South Sudan and
Ethiopia Transport corridor commonly abbreviated as LAPSSET. With Lamu port
having far better maritime access and connectivity than Mombasa port due to its
deep-berths and geographic location, the competition between the ports is
considered minimal as they will be serving different transport corridors. Lamu
port will primarily serve northern Kenya, South Sudan and Ethiopia while
Mombasa port will focus more on the northern corridor linking landlocked
Uganda, DRC and Rwanda.
Competition for Mombasa’s port will come from the
neighboring Dar es Salaam port, 190 miles to the south, which in recent years
has begun to manifest. After a heavy investment of $345 million from the World
Bank, the Port of Dar es Salaam is rising as a tough competitor for Mombasa. In
the first seven months of 2019, business between Kenya and landlocked Burundi
significantly fell: a paltry 1000 tons was imported through Mombasa in 2019 as
compared to 21,000 tons during a similar period in the previous year. This was
the case because Burundi preferred to import its cargo through Dar es Salaam.
Depending on the competitiveness of strategy that each
individual port takes, some will lose the monopoly control over cargo from
their hinterlands that they currently enjoy, threatening the return on their
investments in infrastructure and port operations technology. On the flip side,
port competition will help unbind ports from the bureaucratic control of public
entities as more governments consider privatizing their ports. This will also
have the positive effect of driving down cargo handling costs from increased
terminal efficiencies.