DP World to run Tanzania port as harbours in Africa go private

• Dubai-based logistics giant DP World will be given berths five to seven in the Port of Dar es Salaam to manage. The move comes as rising number of ports in Africa go private as governments seek to boost import/export trade.
• Tanzania plans to increase the port’s revenue collection by 233.7 per cent over the next 10 years under the DP World deal.
• The port handles various types of cargo, including containers, bulk cargo, and petroleum products for Tanzania, Rwanda, Burundi, DRC, and Uganda.

The port of Dar es Salaam, which the World Bank has labelled East Africa’s busiest and most modern, could see its fortunes rise following a deal by Tanzania with DP World to manage and develop it even further.

The Dubai-based logistics multinational DP World has entered into an Intergovernmental Agreement with Tanzania for the development of one of the vital harbours in East Africa.

Private sector infusing efficiency in ports in Africa

DP World’s entry into Dar es Salaam port marks another step where increasing number of African governments are seeking the hand of private sector companies to infuse efficiency in ports. Increased turnaround and use of modern systems is becoming critical as import/export trade gathers pace.

Dar es Salaam port handles a significant share of Tanzania’s international trade, serving as a vital link to and from overseas markets. It handles various types of cargo, including containers, bulk cargo, and petroleum products.

The port comprises several terminals, including the Dar es Salaam Container Terminal, Multipurpose Terminal, and Bulk Terminal. These terminals have berths and facilities for handling different types of cargo and marine vessels.

Managed by the Tanzania Ports Authority (TPA), the harbour’s strategic location along the eastern coast of Africa provides access to landlocked countries in the region. Currently it handles goods destined for Burundi, Rwanda, Zambia, Uganda, and the eastern part of the Democratic Republic of Congo.

DP World is a global port operator and logistics company based in Dubai, United Arab Emirates (UAE). It has a presence in various regions around the world, including Africa.  For Tanzania, DP World will help the TPA overcome trade barriers and build a healthy trade ecosystem, growing the country’s intra-regional and global trade.

DP World’s growing presence in African ports

Already, logistics giant DP World has presence in nearly 10 ports across Africa. These are Djibouti, Senegal, DRC, Mozambique, Egypt, Algeria, Rwanda and Somalia. In June 2022, reports emerged that DP World was in advanced talks with Kenya to secure a deal to manage Mombasa, Lamu and Kisumu ports.

Overall, DP World appears on a mission to have a strong grip on ports in Africa. By providing modern port infrastructure, efficient operations, and logistics solutions, DP World contributes to improving connectivity and driving Africa’s economic growth.

Under the agreement, which awaits greenlight from Tanzania Parliament, DP World will take over control of at least three berths at the Dar es Salaam Port. Under the management of DP World, berths five to seven will see a growth in number of large carriers arriving to the port and effectively increase cargo handling.

Local media reports that Tanzania hopes to multiply the port’s revenue collection by 233.7 per cent over the next 10 years under the deal.

“We have great confidence in DP World and it is on that ground that we are planning to give to it berths five to seven to handle,” Tanzania’s Works and Transport Minister Makamwe Mbarawa told the press.

“With DP World, we expect to see improvement in the port’s performance. We expect to see the discharge period of vessels being cut to one day from the current four to five.”

DP World to manage three berths

Prof Mbarawa said they plan raising port revenue from $3.3 billion per year to $10.9 billion in the next decade. Tanzania is not only looking to have DP World manage the three berths at the port but to manage other logistics in what Mr Mbarawa described as “nationwide transformation across the entire logistics value chain.”

Read also: DP World partners with Standard Bank to establish foothold in Africa

This most recent agreement is also seen as Tanzania’s action towards privatising the port, a call that has been longstanding. While the government maintains the lion’s share of the port’s ownership, the deal with DP World is evidence of the country’s willingness to let the private sector play a key role at the port.

For a while now, the country has been under pressure to allow private sector investment at the port. A primary goal for the move as been the need to improve efficiency. Private sector investors such as DP World, will invest in cutting-edge technologies. They will also deploy advanced equipment, enabling the port to handle more cargo.

Speed up ship’s turnaround

With improved technology, the Port of Dar es Salaam will speed up ship’s turnaround times. Private sector input will see the port of Dar get new terminals and/or refurbishing of old ones. There will also be setup of warehouses and ship repairs centres, opening jobs.

Private sector investment will also reduce operating costs at the port. The time it takes to unload a ship or clear containers impacts on costs for customers. (Klonopin) With fast clearance, more ships can dock, and offload and containers translating to lower costs and making the port competitive.

As Tanzania recovers from Covid-19, data shows cargo handled at Dar port is rising. The port handled 17 million metric tonnes of cargo in 2021 up from 14 million tonnes in 2017.

Private sector brings prospects for improved connectivity and the potential for expansion and modernisation of the port.

With improved conditions at the port then Tanzania’s ease of doing business rate also improves attracting more investors to the country.

Read also:: DP World expands its logistics and supply chain offering in Africa

World Bank Ranking of Africa’s top ports

Trade today is interconnected globally and to effectively conduct business, ports are the pivotal point of facilitating global trade. Ports are the gateways for international trade, they connect supply chains from one part of the world to the other. They enable smooth movement of goods, commodities, and resources between nations.

The World Bank commends Tanzania’s investment at the Dar port which it recognises as the leading port in East Africa.

Dar es Salaam port is ranked 312th globally noted World Bank’s Container Port Performance Index 2022, (CPPI). The index that ranks ports’ efficiency based on vessels’ turnaround time among other factors.

All berths at Dar es Salaam Port upgraded

To achieve these improvements at the port, authorities made a considerable investment to develop the harbour along with related depots. The funding for this development came through the Dar es Salaam Maritime Gateway Project (DMGP).

Through this project, TPA upgraded almost all of Dar es Salaam port’s berths one to seven. The upgrade included among other things, doubling their depths to 14.5 metres from earlier seven metres.

This will allow larger ships to dock, providing more business and increased government revenue. TPA Director General Plasduce Mbossa said the government is getting dividends from the port upgrade. “The number of cargo ships being handled has doubled.”

With deeper waters, larger ships with capacity of over 6,500 tonnes of cargo can dock at the port, Mbossa said.

Along with the deepening of berths one to seven, TPA also invested in new cargo handling equipment. “Modern ship-to-shore gantry cranes that are capable of handling cargo directly from ships to land at twice the speed and efficiency of equipment that was used previously,” the Director General detailed.

*Data from Business Insider Africa.

A Crosssection of Dar Port