* To add fwiw,
DRC recognises importance of port development
African countries need large and efficient modern ports if they are to grow their economies, says a report, as the Democratic Republic of the Congo announces plans for a new development.
The Democratic Republic of the Congo (DRC) has awarded
DP World the contract to develop its first deep water port at the Port of Banana, as a new
PwC report has revealed the importance of port development to unlocking Africa’s economic potential.
Announced on 25 March, Dubai state-owned DP World has won a 30-year concession, with an option for a 20-year extension.
The fourth largest port operator on the planet, the company will own 70% of the joint venture company which will handle the project, with the DRC government owning the remaining 30%.
The port will take two years to construct.
An initial investment of USD 350 million will be part of an eventual USD 1 billion to be spent on the project, which will have the capacity for 350,000 containers and 1.5 million tonnes of general cargo.
DRC’s two current main ports, Matadi and Boma are shallow water ports, limited by the depth of the Congo river, where they are sited.
For deep water cargo, DRC relies on its neighbour, the Republic of the Congo.
DP World was formed by a 2005 merger between Dubai Ports Authority and Dubai Ports International.
Its chairman and chief executive,
Sultan Ahmed Bin Sulayem, said in a statement:
“Investment in this deep-water port will have a major impact on the country’s trade with significant cost and time savings, attracting more direct calls from larger vessels from Asia and Europe, and ultimately acting as a catalyst for the growth of the country and the region’s economy.”
He added that the company was growing its profile in Africa.
José Makila Sumanda, DRC vice prime minister and minister of transport and communications, said the port “will dramatically improve the cost and time of trade as the majority of the cargo is still handled by neighbouring countries.
The project will provide us with a first-class marine facility comparable to other African countries in terms of capacity, draft and ability to handle the latest generation of vessels”.
Port development is essential if African nations are to reach the levels of growth to which they aspire, according to the PwC report,
Strengthening Africa’s gateways to trade, which highlighted the importance, not just of building ports with suitable capacity, but ensuring they run efficiently and effectively.
Sumanda cited expectations that thanks to the project, DRC would “have access to more markets and to bring more efficiency and cost effectiveness to international trade”.
THE IMPORTANCE OF A GATEWAY
Ports are the gateway for 80% of the volume of the worldwide merchandise trade and 70% of its value, the PwC report stated, so it is essential that any country which wants to expand its economy has the capacity to accept all that trade.
This depends not just on building new ports, but on ensuring the efficiency and effectiveness of existing facilities.
The report revealed that a 25% improvement in port performance can increase GDP by 2%.
This reflects the fact that a successful port will generate business across a wide area.
“Ports are a vital part of the supply chain in Africa, with many ports having a far-reaching hinterland often spanning a number of countries, which makes them a natural focus for regional development,” said
Andrew Shaw, head of Africa transport and logistics for PwC.
“The global transportation and logistics industry can no longer afford to ignore developments in Africa,” said Shaw.
“Logistics service providers and ports in particular will continue to play a key facilitator role in trade competitiveness and thus facilitate trade and sustained economic growth across the region.”
The report called on African nations to stop looking at the revenue that they can extract from their ports and instead view them “as facilitators of trade and growth”, and emphasised the example of China, which considers the trade benefits when assessing the value of a port.
Too often, countries only consider expanding a port when it has reached full capacity, leading to delays in growing their trade capabilities, which leads to bottlenecks and reduces their competitiveness.
PwC estimates that countries in sub-Saharan Africa could save up to USD 2.2 billion in logistics costs by increasing the throughput in the region’s ports.
“Trade competitiveness requires governments and key stakeholders to see ports as facilitators of trade and integrators in the logistics supply chain,” said Shaw.
“Efficient ports can make countries and regions more competitive and thus improve their growth prospects. The reliability and efficiency of each port terminal, including minimising delay to shippers, is critical to enhancing future trade facilitation.”
Over the past 30 years, sub-Saharan merchandise trade has increased by 300%, yet its proportion of the world trade growth in the same period is less than 1%, showing how it has failed to keep pace with the rest of the world.
As it stands, Durban, Abidjan and Mombasa are the current front runners to be the region’s leading ports, according to the report.
Most of the region’s ports remain publicly owned and managed, which PwC argues makes it difficult for them to raise the capacity required for improvements.
As such, it predicts a greater role for the private sector in future and the DP World deal points a way to future joint ventures.
There is a growing awareness of the role of ports as part of the wider infrastructure network, with the adequate road and rail access part of the picture if sub-Saharan ports are to operate at maximum efficiency and contribute to the economy.
Pointing to new port developments in Nigeria and Ghana,
Ian Arufor, of PwC Nigeria, said: “, which ultimately drives economic development.”
Until now, intra-African trade has been underdeveloped, due to poor transport infrastructure between African countries.
(AfCFTA), last month, there is a movement to improve this situation and an acknowledgment of the need for infrastructure investment across Africa.
With China’s Belt and Road trade policy now on the scene, the potential opportunities and rewards that come with improving transport into and throughout the continent cannot be overlooked.
Kuria Muchiru of PwC Kenya said: “Investments in rail are seen as a major step towards contributing to improved performance. Developments in multimodal operations and master planning of the ports to keep up to date with increasing throughput, which in turn fuels economic growth are critical to efficiency.
In the long run East Africa is expected to a be a major transhipment hub on the East Coast of Africa, which will reduce freight costs in addition to contributing to the Belt and Road. ”
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Food for thought on the Road to Rail and Port
Frank
