- As we mark Africa Day today, our writer, Ken Mutuku, takes a deep dive into the port industry across the continent. He highlights it vast potential and the big challenges holding it back.
- Every year, May 25th, serves as an opportunity to acknowledge the remarkable progress Africa has made, while reflecting on the challenges it continues to face.
- Key ports offer entry into several resource-rich regions and countries such as Kenya, Tanzania, Mozambique and South Africa.
Africa’s port industry continues to play an integral role in the continent’s supply chain cycle, and has been powering import and export trade of developing economies since colonial times. Despite this, it is still an underutilized and underdeveloped resource that requires significant financing and upgrade to power accelerated growth in resource-rich African economies.
Africa, a continent of vibrant colors, diverse landscapes, and rich cultural heritage, is a true testament to the human spirit’s resilience, creativity and entrepreneurship. In commemoration of Africa Day, we embark on an enchanting journey to the ports of Africa.
Africa’s port industry vital cog in trade
Despite the continent’s large size, it still represents only three percent of global trade. Even with most of the world’s resources, Africa needs the means to harness her potential fully. Fortunately, with ongoing digital shifts, African economies are keen on improving their infrastructure, including ports.
Exports are primarily commodity-based, comprising oil, coal, iron ore, cocoa, palm oil and timber. Fortunately, with the digital transformation and the upcoming fourth industrial revolution, it is time they fixed the export gateways of these commodities.
Africa’s port industry is one of the oldest means of transport, only rivalled by the railway. They are crucial in creating and establishing social, political and cultural systems. For instance, take Eastern and South Africa, home to some of the most prominent ports in the world.
Read also: Calming the storm: What needs to be done in Africa’s seaports to improve efficiency.
Key ports offers entry to several resource-rich countries such as Kenya, Tanzania, Mozambique and South Africa. Developing Africa’s port industry led to the rapid growth of host cities Mombasa, Dar es Salaam, Maputo and Durban.
Ports powering economic value chains
A prime example is Kenya’s coastal regions. The Port of Mombasa has for years powered a business value chain benefiting both local and foreign entities’ trade. Currently, the Port of Mombasa is a vital entry and exit point for cargo belonging to a vast hinterland. The harbour servers Kenya, Uganda, Rwanda, Burundi, DRC, Tanzania, South Sudan, Somalia and Ethiopia. According to the United Nations Conference on Trade and Development, ports have significantly improved the economic growth of 16 out of the 54 African countries.
According to the UNCTAD, Africa’s port industry accounted for 12.5 percent of the southern regions of Africa trade, and 7.8 percent in the Northern Africa zone. These statistics show that imports and exports are vital aspects of the $3.1 trillion African GDP.
Fortunately, the importance of Africa’s port industry keeps registering in governments and effort are underway to rebuild and refurbish its several ports. To improve trading in Africa, you must first improve its transportation infrastructure.
Ports in Africa handle about four percent of the world’s trade containers. This is largely due to huge huge gap between Africa’s ports and world-leading ports. As a result, a number of African countries are setting out to improve their port infrastructure.
For instance, the Port of Durban is undertaking a $7 billion upgrade. The investment is seeking to expand Durban’s container handling capacity to 11 million from 2.9 million units per year.
In Cherchell, Algeria, the El Hamdania Port Development is carrying out a $6 billion upgrade of the deep-water seaport. Further, a $1.5 billion investment is underway in Angola’s Barra Do Dande Port. Once complete, it will see Angola expand its oil and gas storage capacity and export volumes.
Egypt’s Ain-Sokhna Port ($1.3 billion), and Senegal’s Ndayane Yenne Port ($1 billion) are other key port modernisation projects.
Importance of Africa’s port industry
According to Dr Bernice McLean of the African Union Development Agency, “there are plenty of opportunities to strengthen the continent’s economy through a blue economy, and its port industry plays a vital role.”
According to statistics, ports are the gateway for 80 percent of global merchandise trade by volume and 70 percent by value. With Africa having a vast majority of human capital and natural resources, finding ways to improve its transportation system significantly aids it.
Narrowing down to various regional ports marks a heavily relied-on gateway for most trade. The port of Djibouti is heavily relied upon, given its affiliation with the Middle East and North African market. It serves Ethiopia almost exclusively.
Ports play an integral role in the logistic network within the continent, having extensive hinterlands that cover multiple countries. According to the African Union, in 2019 Africas’ port industry accounted for over 90 percent of the region’s trade merchandise transported by sea. Further, since it is strategically located amid busy global sea routes, it aids it opens the door to the diversified global market.
Read also: Africa’s best blue economy investment opportunities
Its ability to handle various types of cargo, including bulk commodities, has set it apart from other transportation methods.
Sea transport outpaces air transport
Over the years, Africa’s port industry has specialized in handling cargo efficiently. Its extensive storage and warehouse facilities allow temporary storage, consolidation and inhibition of goods. Take container terminals, for instance, they are the primary facilities used to handle the majority of global containerized trade. Furthermore, Africa’s port industry contains additional facilities such as crane, storage yards and other handling equipment.
Africa’s port industry serves as a logistical hub and provides value-added services that are the backbone o international trade. According to UNCTAD, sea transport outpaces air transport in terms of cost efficiency and quantity.
Furthermore, ports in Morocco, Egypt, Nigeria and South Africa have established free trade or special economic zones within the harbours. The UNCTAD’s Handbook on Special Economic Zones in Africa recorded 237 SEZs distributed across 38 countries.
Africa’s port industry also serves as a way of creating jobs in the economies. It creates direct opportunities for dockworkers, crane operators, truck drivers, customer officials, ad logistics professionals. Further, they give rise to indirect jobs associated with other industries within Africa’s business ecosystem, such as manufacturing, warehousing and transportation.
Challenges facing Africa’s ports
One of the outstanding challenges facing the sector is insecurity in some regions. The Port of Mogadishu, carries a huge share of insecurity related challenges in the Horn of Africa. Since the fall of Somalia’s government early 1990s, militias destroyed the port, vandalised infrastructure, cutting off the country from progress. Since then, the area has been vulnerable to militant activity, and thus, many investors have given up on its recovery. Its government is yet to ensure local security and stability.
Currently, Port Sudan is swelling with Sudanese and foreigners escaping the conflict-struck country. Port Sudan is Sudan’s main seaport and entry point about 90 percent of the country’s global trade volumes.
Poor infrastructure is also disadvantaging optimal use of Africa’s critical gateways to the outside world. Unfortunately, most African governments have neglected their port’s infrastructure as big economies drastically modernise their port operations.
Read also: Seaports logistics efficiency to determine Kenya, Tanzania supremacy wars
This attribute couples with the corrupt institutions throughout Africa. With graft at the root of most governmental bodies, funds allocated to improve Africa’s port industry often “disappear”, without a trace.
Inability to embrace digital transformation
Another disease plaguing imports and exports trade within African ports is their inability to adapt to current digital transformation. This is significantly affecting most management systems within ports. The lack of technological advancement within ports has caused various loopholes within the systems that break life to vices such as corruption or theft.
Multiple industries, such as agriculture, are changing through the implementation of agritech. If such a long-lasting economic activity can embrace digital transformation, why not Africa’s poor industry?
However, these issues only stitch a portion of the vast errors that ports in Africa have. Despite these issues, it will remain necessary if any country seeks international trade. Various landlocked countries also rely on numerous ports in Africa. If we can find a way to improve them, we can experience rapid economic growth. And obviously look forward to joyous Africa Days ahead.
