Port of Durban likely to emerge as one of Africa’s major hubs – PwC
Johannesburg – Ports in Durban, Abidjan in Côte d’Ivoire and Mombasa in Kenya are most likely to emerge as the major hubs in sub-Saharan Africa, according to a new report published by PricewaterhouseCoopers.
It likened them to major facilities such as Rotterdam and Antwerp for Europe, New York and Los Angeles for North America and Singapore and Shanghai for Asia,
The report titled “Strengthening Africa’s Gateways to Trade: An analysis of port development in Sub-Saharan Africa” published on Thursday found that the three ports in South Africa, West Africa and East Africa are likely to become increasingly sophisticated due to their air links, proximity to highway networks and the internet as well as their access to a large hinterland.
Internationally, shipping remains the most important method of trade and they act as gateways for 80% of merchandise trade by volume and 70% by value.
South Africa’s ports outshine the rest of Sub-Saharan Africa’s and Durban is ranked 25th in the world in attractiveness. However, it only achieves 75% of the efficiency expected from a major global hub port.
Four of the eight largest bulk ports in Sub-Saharan African are located in South Africa. Saldanha in the Western Cape and Richards Bay in KwaZulu-Natal are specialist ports handling iron ore and coal respectively. Durban, the largest container port, also handles the third-largest bulk and break-bulk volume. SA’s other port is in Cape Town.
PwC states that ports are important infrastructure in attracting foreign direct investment (FDI) and these inflows were below average since 2016 in the continent’s two largest economies, Nigeria and South Africa, due to a number of factors including weaker commodity and oil prices as well as a drought. However, the audit and advisory firm expects this to improve in 2018.
According to PwC’s analysis, 25% improvement in port performance can increase a country’s Gross Domestic Product (GDP) by 2%.
Africa returns empty containers
Much of the economic trouble the continent faces can be seen through the situation at ports, as a microcosm, with the continent historically exporting raw commodities and importing the beneficiated products.
This has resulted in most African countries having a large imbalance in trade focused on commodity exports and manufactured imports which poses major shipping cost challenges. Sub-Saharan Africa imports are predominantly containerised cargo, while exports are mostly handled as bulk freight.
This trade imbalance which has greatly affected the continent’s economic chances, means that many containers return to ports abroad empty, thereby absorbing valuable port capacity and resulting in higher logistics costs for inbound traffic, according to PwC.
PwC urged African governments to improve port facilities, amidst rising commodity prices as the upgraded infrastructure will enhance the continent’s trade potential to export manufactured, semi-processed or agricultural goods in containers and countries would be able to expand trade in higher value exports.
Superior ports will also allow for higher volumes of intra-African trade, which currently stands at just 16%, a problem that the recently signed protocol towards a Continental Free Trade Area (CFTA) hopes to address.
Most ports in Sub-Saharan Africa are operated by governments and Transnet, a major state owned enterprise (SOE) in SA that separates the business into the landlord and port operation divisions, under the Transnet National Ports Authority and Transnet Port Terminals respectively.
PwC’s report found that Transnet in 2017 continues to invest heavily in port and freight infrastructure and ploughed almost R1bn in maintenance and acquisition of cranes, tipplers and dredgers in South African ports.
Investments are also being made in the Waterberg region in Mpumalanga to support coal exports and Transnet has also bought 1 319 new locomotives for the general freight and coal business.
Source – Fin24