Strengthening Africa’s gateways to trade
Ports are a vital part of the supply chain in Africa with each port having a far-reaching hinterland often spanning a number of countries.
This report was compiled by PwC’s Capital Projects and Infrastructure (CP&I) Transport and Logistics team using a combination of information obtained from interviews with port authorities and port operators, together with detailed research and incorporating our extensive knowledge of the port, trade and transport sector.
Africa, despite its enormous size, still represents only a small portion of world trade. Exports are largely commodity based and include oil, coal, iron ore, ferrochrome, precious metals, cocoa, palm oil and timber. Yet, Africa is growing and many of its larger economies are beginning to diversify away from a traditional commodity focus. Ports represent the gateways for these commodity exports, but as countries grow and develop, ports are also essential for sustaining and improving more robust and diverse growth in African economies through the import and export of manufactured goods and other products.
Africa needs to take advantage of the economic potential of its ports and shipping sector if it is to realise its growth ambitions. Globally, ports are gateways for 80% of merchandise trade by volume and 70% by value. Investment in ports and their related transport infrastructure to advance trade and promote overall economic development and growth is therefore vital - particularly in emerging economies that are currently under-served by modern transportation facilities.
Map above depicts the throughput at all the major facilities across sub-Saharan Africa showing a trend in volumes and differences between regions.
Globalised supply chains have enabled goods and services to be transported across the world to meet the ever-increasing demands of populations. Ports are gateways for 80% of global merchandise trade by volume and 70% by value. As an emerging market region endowed with vast natural resources and a young and growing population, SSA must accelerate its market access and trade both across the region and with the rest of the world. This is important to stimulate economic growth, diversify its economies, reduce the inflationary effects of weak transport and logistics infrastructure, become globally competitive, create employment and reduce poverty.
The economy of SSA gained strong momentum up until 2014 when several factors led to a severe slowdown in growth. Major oil producing countries, notably Angola and Nigeria, were hit by falling oil prices, while South Africa saw contractions in its mining and manufacturing industries and had to deal with the effects of drought on the agriculture market.
The 1.2% growth estimate for 2016 is the lowest SSA has experienced for two decades and worse than that seen in the aftermath of the 2008/9 global economic crisis.
The efficiency and effectiveness of a port and port terminals is critical to success. Performance also has a direct impact on the efficiency and reliability of the transport network in which the port is just a node for the transfer of goods. High quay productivity does not mean much when ships have to wait at anchorage, while cargo delivery processes are slow and inland transportation networks are poor.
A range of physical, organisational, technological and institutional elements all play an integrated role in determining port capacity and efficiency. Although the sections below analyse each component separately, it is important to recognise that they contribute in an integrated manner to port capacity.
Historically, ports and terminals had to compete on the basis of price leadership or value-added services. Over the last few decades, however, many locations introduced special economic zones around ports to further enhance the appeal of both the port and the economic benefit of the jurisdiction around the port (and thus the host country).
A further trend has emerged with ports positioning themselves as hub ports for transshipment to smaller neighbouring ports. This trend is particularly prevalent in West Africa where a number of ports are attempting to market themselves to provide such a service. Notwithstanding these ambitions, Figure 2 shows that in practice only a few African ports can truly be classified as a hub port. In addition to the fact that most do not have the supporting landside regional transport system essential for the concentration of cargo flows required at a hub port, hub ports and terminals must also be able to accommodate larger ships and handle large volumes efficiently.
Many countries in sub-Saharan Africa remain dependent on port infrastructure built before the 1960s, when port standards were very different. Today, larger deepdraught vessels require a depth of 10 metres or more, while the ports developed in the past offer no more than seven metres. Furthermore, these established ports are often major trade hubs that are congested and difficult to expand given their position within the bounds of rapidly growing cities.
New port developments are multifaceted in that they are increasingly multisectoral in nature, involving a number of ancillary projects across a broad range of sectors, often focussing on back-of- port economies and linkages by other modes of transport. The report assesses current investment in SSA’s ports and reveals a number of trends:
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