Moving the goalposts
It's not easy to achieve a snapshot of what's happening in East Africa - mainly because politics, economics, corruption, borders and the lasting impact of conflict combine to keep the goalposts moving and investment plans uncertain.
However, the region is attracting investment - earlier this year, for example, DP World signed an agreement to develop the multipurpose Port of Berbera in Somaliland, with the aim that the port should "achieve its potential for becoming a regional trade and logistics hub", according to the operato. The group already has operations in Djibouti, where it operates the Doraleh terminal, as well as in Mozambique.
The phased $442m project at Berbera will include setting up a free zone to support the development of the port's trade corridors.
"Investment in this natural deepwater port will attract more shipping lines to East Africa and its modernisation will act as a catalyst for the growth of the country and the region's economy," said DP World chief executive Sultan Ahmed Bin Sulayem. A modernised port will provide an additional gateway for the Horn of Africa that is needed for its development, while serving other landlocked countries along the east coast, DPW added.
Along the coast of East Africa, ports are jostling for position when it comes to serving their landlocked neighbours. Mauritius, meanwhile, has started to position itself as a transhipment hub - in the words of one expert, seeking to be 'the Singapore of Africa'. However, Durban, with its superior berths, drydocks and other facilities, continues to offer stiff competition to Mauritius.
"Countries on the East Coast of Africa have over many years been characterised as agrarian economies," says one senior maritime source in Mombasa. "It is only recently that mineral exploitation surveys have discovered that many African countries have sizeable deposits of oil and gas. This has changed the focus of these countries and has also seen the world oil majors queuing up to participate in the extraction and sale of these products."
Mozambique and Tanzania have gas blocks along the coast, while Kenya and Uganda have oil blocks inland and around lakes Turkana and Albert respectively. However, the slump in oil prices has naturally put the brakes on this quest, he says.
"The success of the oil production would have instantly impacted well on the performance of these ports. Kenya has, however, continued to expand its port in Mombasa (where the first part of a new container terminal was inaugurated in September) and build a new one in Lamu. It is expected that Lamu would serve Ethiopia and Southern Sudan, while Mombasa, East Africa's largest seaport, will continue serving Uganda, Rwanda and Eastern Congo. Kenya, however, still has to contend with the terrorism problem from its challenging neighbour Somalia."
It is understood that one of the reasons Uganda chose Tanzania over Kenya for its crude oil export pipeline was the insecurity caused by Somalia's Al Shabab; in addition, Kenya is in the international court arguing its case against Somalia on the border line between the two countries. All of this will affect business at the port of Lamu, says the Mombasa-based expert.
Tanzania, on the other hand, has voted in a new president who seems keen to rid the country of corruption and improve overall work ethics."
Tanzania has plans to build a new port at Bagamoyo, 53 kms north of Dar es Salaam. This port was promoted by the previous president, Jakaya Kikwete, and is due to be constructed/managed by China Merchants, with co-finance by Omani sovereign funds. However, the project has cooled, according to another source, who describes the location has having poor road infrastructure and shallow water. "The cost to dredge is immense," he says. China Merchants' senior management has changed and it's understood the company is pushing hard for a 99-year lease and to be granted rights to develop new projects such as Berths 5-7 or Berths 12-13 at Dar es Salaam port.
Dar, which handled about 660,000 teu last year, has its own challenges, which have led to a steep decline in volumes. There are two terminals. The privately held Tanzania International Container Terminal is operated by Hutchison Ports, in a 25-year concession with ten years to run, and has about 80% volume market share. Transit cargo is handled to/from DRC, Rwanda (a staging post for DRC), Burundi and Zambia; an office was opened in Kigali, Rwanda, in July to provide a marketing presence for landlocked countries.
The government-controlled Tanzania Port Authority, also landlord of TICT, handles ro-ro, general cargo, bulks, oil and some containers in the second terminal at Dar.
In September, it was announced that the parliamentary committee for industry, trade and environment would invite the prime minister, key stakeholders and ministries responsible for port management to a meeting to rescue volumes at Dar es Salaam. A number of factors have led to the sharp decline, not least the country's introduction of VAT on transit goods and strict tax collection measures imposed by the government.
"All business is now being harassed on tax," says the source. "What they do is decide what they want. Companies have to pay 30% immediately and the tax is never concluded - they just move on to the next business and harass them. Consequently, Indian Tanzanians and Chinese entrepreneurs are being held to account and forced to pay taxes - as a reaction they are now holding on to their money, which is slowing the economy."
There is also the slowdown in demand for raw material to China, including copper and agricultural products, he says, and competition from Durban, where the Rand is at an all-time low.
VAT is the most emotive subject, with those hit including port handling and warehousing operators. VAT cannot be passed on and reclaimed, as all forwarding activities have to be domiciled in Tanzania, so in effect it is an 18% price increase. Kenya changed its mind about applying VAT, seeing that it would impact business. For Dar es Salaam, the result is a loss especially of Zambian and southern DRC business. TICT is thought to be 20% down on overall volumes, and TPA almost 50%.
Despite these troubles, there are major plans for upgrading the port. There is a $740m commitment from the World Bank for dredging the channel to 15 m and renovating berths 5, 6 and 7; the World Bank is advocating that TICT takes over management of these so that when they are combined with the existing quay, three 8,000 teu vessels could be handled simultaneously. However, TPA is understood to want the new berths for itself.
In Mozambique, a new railway is part of a major project involving a new port at Ponta Techobanine. The governments of Botswana, Mozambique and Zimbabwe have signed an agreement for the construction of 1,700 km of railway through all three countries, to facilitate trade and encourage investment in mining, logistics and industry. Each government is to provide $200m for the project.
Meanwhile, investment continues at the Port of Maputo, with the refurbishment of berths continuing alongside a major dredge of the access channel. The Maputo Corridor Logistics Initiative, a private/public partnership, is developing and promoting the 600 km corridor as the natural access route between the industrial heartlands of Southern Africa and the Indian Ocean. Similarly, Mozambique's Beira Corridor, a road and rail artery linking large parts of Zambia, Malawi, Zimbabwe, the DRC and Mozambique to the Port of Beira, is being upgraded and promoted.
MAURITIUS INVESTS IN ITS FUTURE
Ongoing developments at Port Louis, Mauritius, include container terminal and quay extensions, new gantry cranes, new cargo handling equipment, dredging and land reclamation. These are all part of Mauritius Port Authority's strategy to promote Port Louis as a transhipment hub, says Daniel Ng, chief executive officer of Mauritius Cargo Community Services (MACCS).
"A lot of things are happening in Mauritius," he says. "Recent developments have also included the launch of the port master plan for future development, which would include the creation of an island terminal."
Port Louis is already a transhipment point for MSC and, Mr Ng points out, Maersk used to tranship containers via Mauritius.
From an IT perspective, Mauritius' customs authority is launching a 'single window' that would connect all government-related agencies concerned with border transactions. Meanwhile, MACCS has launched an import ocean module to streamline import container handling while providing visibility in the logistics and customs process, an export module to enable the transmission of booking information to all stakeholders, and a SOLAS module through which VGM information is conveyed to shipping lines and terminal operator CHCL on a live basis. CHCL is itself upgrading its terminal operating system.
As well as transhipment, the port master plan includes developing Port Louis as an international bunkering hub; Bomin is now operating out of the port. In October, the International Bunker Industry Association partnered with the government of Mauritius to run a forum examining business opportunities linked to the island's development as a bunkering supplier and hub.
Source: Port Strategy