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Ports competition drives investments in SSA

By: Maclean Kwofi
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Increasing competition between ports is driving investment decisions in most sub-Saharan African (SSA) countries, a new report on ports by the PricewaterhouseCoopers (PwC) has identified.

While port ownership and service models are gravitating towards greater private-sector involvement, it has also served as a wake-up call to many African governments, according a PwC Africa, Transport and Logistics Leader, Dr Andrew Shaw.

He said assessment by PwC current investment revealed that shipping lines and port operators were increasingly driving port investment in most SSA countries.

According to him, while externally-funded commodities and consumer goods are driving investment, appetite for large green-field investment is waning.

This, he said, was pushing the focus on intermodal facilities and dry ports.
“There is greater awareness of infrastructure interdependencies.”

However, Dr Shaw said it was important to note that these trends reflect

Greater private-sector involvement
One of the key questions around port investment is to understand which ownership and management structure offers the best opportunities for

• Raising capital.
• Connecting to the hinterland through corridors of trade.
• Owning and operating other ports and related infrastructure.
• Protecting a strategic resource to further the governments’ developmental goals.

To answer these questions, Dr Shaw said it was important to consider the types of ports and their functions, as certain port types tend to favour specific ownership and management models.

He said the report explored different port ownership and operating models viewed from the ownership and management structure.

“Whereas most of the large ports in the developed world are landlord ports that are owned by either a city or regional government, SSA ports are often regarded as a national strategic asset and are by and large owned by the national or central government.”

The director noted that container port ownership by private companies was not common, but a good example of a privately-owned container port is ABP (Associated British Ports) in the UK.

According to him, some of the world’s largest bulk and oil and gas terminals are privately owned by multinationals such as Vale in Brazil and BHP and Rio Tinto in Australia.

The latest trend is for bigger ports to adopt a corporatised model as it gives them more freedom and opportunities to expand their services to hinterland transport connections, or to obtain shares in foreign ports.

The Rotterdam Port Authority and Antwerp Port Authority have, for example, both bought interests in ports in Oman, while the former is also active in Indonesia and Brazil.

There is an incentive for these port operators to support or control the transport chain for the benefit of their own ports, thus the line between port and non-port activities is becoming blurred.

Port service models in SSA are diverse. Whereas West Africa has mainly adopted a tool port model, East and Southern African ports are predominantly public-service ports, although some have private terminals such as the TICS container terminal at Dar es Salaam.

Even in South Africa, the operator, Transnet, is a state-owned company which puts port ownership and operations under government control.

However, Transnet has separated the landlord and port operation functions through two divisions, Transnet National Ports Authority and Transnet Port Terminals respectively.

Future drivers
Many countries in sub-Saharan Africa remain dependent on port infrastructure built before the 1960s when port standards were very different.

Today, larger deep-draught 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 multi-sectoral in nature, involving a number of ancillary projects across a broad range of sectors, often focusing on back of- port economies and linkages by other modes of transport.

These sectors include power and water supply, road and air links, industrial plants, commercial properties and agricultural supply, all of which play major roles in the development of economies. —GB