The poor design of Mombasa and Dar es Salaam ports is limiting their capacity to handle of cargo capacity, resulting in delays and inefficiencies. An analysis of port development in sub-Saharan Africa, conducted by PricewaterhouseCoopers’ titled, ‘Strengthening Africa’s gateways to trade’, shows that Dar es Salaam and Mombasa port volumes exceed their actual throughput capacities. “For the East African ports this is a factor that implies considerable delay especially during busy periods and means that significant capacity would have to be added to the ports to meet future demand,” the PwC said. Within the region, Djibouti has the highest installed capacity of 1.8 million twenty-foot equivalent units (TEUs) annually, but only manages less than a million in volumes. Mombasa has an installed capacity of 500,000 TEUs but handles more than one million. Dar on the other hand has an installed capacity to handle 450,000 TEUs annually but currently does 750,000 TEUs annually showing the capacity constraint in the region’s’ two largest ports’ infrastructure. Operational performance The three countries have in the last three years been upgrading their port facilities. “There has been a lag in port investment, with port expansion and expenditure on port assets often not keeping pace with trade growth. Together with poor operational performance this creates a bottleneck to economic growth, increasing logistics costs, reducing reliability and making African countries less globally competitive,” states the report. “Kenya and Tanzania have stepped up investment in expanding and upgrading the two main ports in the region to ensure they...

The African Continental Free Trade Area (CFTA) agreement was signed by 44 countries on March 22, committing them to remove tariffs on 90 per cent of imports. This according to Renaissance Capital is expected to improve intra-regional trade which stands at 20 per cent in Africa vs 62 per cent between advanced economies. Meanwhile, of Africa’s regional blocs, the Southern African Development Community (SADC) has the highest intra-regional trade at 23 per cent. The Common Market for Eastern and Southern Africa (COMESA) has the lowest at 8 per cent, albeit up from 4 per cent in 2000. RenCap found that the blocs with higher intra-regional trade – SADC and the East Africa Community (EAC), albeit a far second at 10 per cent – have diversified exports and the advantage of having member states that are geographically close. It said that COMESA’s export diversity is undermined by the fact that member states are geographically distant (Swaziland to Egypt). The bloc with the lowest export diversity is the Economic Community of West African States (ECOWAS). RenCap attributed this to the dominance of commodities (crude oil, cocoa, gold) that are exported to offshore processing facilities. However, Dangote Cement’s plan to export 3mnt pa of clinker (c. 17 per cent of its Nigerian production) from 4Q18 could see intra-ECOWAS trade improve from 9 per cent. Intra-regional trade is a growing African story According to RenCap, compared with other regions of the world, trade between African countries is low because several countries export the same...

Escalating tensions between the US and China could hurt a global trade expansion that’s already expected to be lower this year than in 2017, the World Trade Organization said Thursday. The Geneva-based body warned that there are signs a looming global standoff is already affecting business confidence and investment decisions, possibly jeopardizing the projected growth, Bloomberg reported. The warning chimes with that of Christine Lagarde of the International Monetary Fund, who cautioned on Wednesday that the world economy must avoid being sucked into a protectionist spiral. The global trading system, which has reduced extreme poverty, cut living costs and created millions of high-paying jobs, “is now in danger of being torn apart,” she said. “This important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation,” WTO Director-General Roberto Azevedo said in a prepared statement. “It is not possible to accurately map out the effects of a major escalation, but clearly it could be serious,” Azevedo told a news conference in presenting the WTO report. He said that “risks to the forecast are significant and they are predominantly on the downside” while adding that technically a trade war has not started. Cycle of Retaliation Trade growth could suffer as a result of Trump’s pugnacious approach to trade and his administration’s preference for unilateral tariffs rather than negotiated solutions within the context of the WTO. His stance has already generated strong backlash from China. “A cycle of...

It is a chilly morning at the Busia Polytechnic. From a distance, one is welcomed by a fish aroma which whets your appetite for freshly cooked fish. On approaching the institution, you find tens of dealers who have displayed fish in various forms. Though Busia is a major fish trade hub, this is the first time the border town is hosting a fish exhibition. The exhibition is the brainchild of World Fish, a non-governmental organisation that runs a project dubbed Fish Trade. Fish Trade is funded by the European Union, New Partnership for African Development (Nepad) and the African Union. Traders at the Busia cross-border fish exhibition. The exhibition is the brainchild of World Fish, a non-governmental organisation. PHOTO | RACHEL KIBUI | NATION MEDIA GROUP FISH PRODUCTS On this day, stakeholders in the fish sector from Uganda and Kenya have gathered to showcase various products and services in this sector. Some of them have brought dried fish, others have fillet, others fresh fish, ice cubes and others have omena. Yet others are busy, making different fish dishes and traditional accompaniments from both Kenyan and Ugandan cultures. “We are here to showcase our products as well as address issues affecting fish trade across the border,” says Charles Achieng’ the Kenyan chairman of Busia Cross Border Traders Association. Trade along this boarder, he adds, can only thrive if there is harmonisation between the Kenyan and Ugandan traders. Traders display various fish products at the Busia expo. Mercy Kawala, a researcher from...

Africa’s increasing integration has been much talked about over the past couple of weeks. The progress displayed on this project is one for which Africa’s political leadership deserves praise, and is one of the most significant developments on the contitnet for many years. Africa’s cooperation efforts date back to 1963, but attempts to achieve this broad strategic objective have failed over the years. The signing of the Continental Free Trade Area (CFTA) deal by 45 of the African Union’s 55 member states marks a watershed moment for African integration. With the dream of an interconnected Africa now closer than ever before, the continent could welcome new economic opportunities in the coming decade. However, the fragmentation of the African market remains its most significant challenge.  Transportation and communication costs are high when compared to other markets such as China, Europe, or the US. These high costs are holding back the development of integrated supply chains throughout the continent. Africa is headed in the right direction though, with initiatives such as the recent common air transport market, that could drive down airfares, as well as plans for visa-free travel for Africans across the continent. Infrastructure in Africa is just beginning to develop. Ambitious schemes like the Lamu Port-South Sudan-Ethiopia-Transport Corridor Project (LAPSSET) in Kenya are what the continent needs. LAPSSET is an attempt to build a transport and logistics hub which would cement Kenya as a gateway to the East African subregion. The rail network is growing quickly, though only with the borders of specific countries. However, the East...

KAMPALA, UGANDA- 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. However, port investment must be channelled appropriately to ensure financial sustainability and economic growth. Investment is not always about building new ports or terminals – investment spent on infrastructure without cognisance of the efficiency and effectiveness of the performance of the port may not produce the desired results. Port performance must be seen in the context of not only port infrastructure shortfalls, but also the fact that port performance has a direct impact on the efficiency and reliability of the entire transport network in which the port is just a node for the transfer of goods. These are among the key findings of an analysis of port development in sub-Saharan Africa (SSA) issued by PwC recently. The report, ‘Strengthening Africa’s gateways to trade’, was developed in response to the challenges facing SAA’s ports in attracting external investment and highlighting the regional economic and growth benefits thereof. Why ports matter As an emerging market region endowed with vast resources and a growing population, SSA must accelerate its market access and trade across the region and with the...

British Minister of State in the Department of International Trade Greg Hands has lauded Diageo investments in Kenya through East Africa Breweries Ltd (EABL) as a mark of the strong trade ties between the two countries. Speaking during a tour of EABL’s Ruaraka plant, Mr Hands said he was keen to see solid trade and investment initiatives between the UK and Kenya and that emerging opportunities are safeguarded by robust trade policy. Foreign investor “I’m incredibly proud that the UK is the number one foreign investor in Kenya. As I have witnessed first-hand here, this is not only a long-standing investment but I’m also told of a new plant coming up in Kisumu, which as I understand will provide 110,000 direct and indirect jobs,” the minister said. “That is a massive number of people entering the job market, which I think is a fantastic thing.” In the last five years, Diageo, through EABL has invested Sh30 billion across its East African operations and impacted the lives of over 30,000 farmers to cement its position as one of region’s most socially responsible companies. EABL estimates it will recruit a further 15,000 farmers to supply sorghum once Kisumu brewery is complete. Andrew Cowan, the EABL Chief Executive said Diageo’s presence in Kenya is part of a much bigger picture. “Not only is this plant in Ruaraka the single biggest plant in the whole population of Diageo, but EABL is deeply stitched into the tapestry of Kenya,” he said. Socially relevant  “We are...

The vibrant expansion of Tanzania’s Dar es Salaam port and the Djibouti port are posing the biggest threat to the growth of Mombasa port, a new report says. The 2018 Africa Ports report by audit firm PriceWaterHouseCoopeers (PWC) has noted that the Tanzania government’s determined investment in the Dar port, and the development of other ports in Tanga and Bagamoyo, has greatly shut out Mombasa port as the dominant trade hub in the region. As a result, neighbours in the hinterland such as Uganda and Rwanda are now preferring the Tanzanian ports as transit points for cargo. Ethiopia, a country that is coming up strongly as an economic giant in the region, only crippled by its land-locked status, prefers the port of Djibouti. “Mombasa would be a major contender to be an East African hub, only for the fact that it is greatly challenged by the proximity of the developing Dar-es-Salaam port and other Tanzanian ports. This makes it hard for Mombasa to emerge as an important hub,” the report reads in part. “Though posing much of a less threat, Djiobuti’s growth can also not be under-estimated. Mombasa should take advantage of the larger hinterland it serves, and improve its operational efficiencies to shrug off these threats.” The report also emphasises that for Kenya to regain its regional status as an economic powerhouse, which is being continually challenged by its neighbours, it has to be keen in developing its port infrastructure especially the Lamu port which is part of the...

A leading global shipping line, Hapag – Llyod which is a multi-national German based transportation company, has began its operations to the port of Mombasa. Hapag Llyod is the world’s sixth largest container carrier in terms of vessel capacity. MV Spero Majura, which is a ship operated by Hapag – Llyod made its maiden trip to the East African region by calling at the port of Mombasa on Thursday 4:00am carrying 1,770 Total Equivalent Units (TEUs). Captain James Kagaoan, steered the vessel from the port of Jedda, which is the largest and busiest port in the Middle East, to Mombasa before heading to Dar-es- Salaam in Tanzania. At the port of Mombasa, the vessel discharged 154 TEUs. Kenya Ports Authority managing director Catherine Mturi-Wairi said the port of Mombasa is now receiving vessels from six of the top ten container shipping lines of the world. These are the Maersk Line, Mediterranean Shipping Company, CMA-CGM Lines, China Ocean Shipping Company (Cosco), Evergreen Shipping Line and now Hapag – Llyod. In a speech read on her behalf by KPA general manager engineering services, Rashid Salim during MV Spero Majuro’s maiden call, Mturi-Wairi said the port of Mombasa is tremendously growing. “The decision to have more shipping lines calling at the port is also a manifestation of the confidence the global shipping and business community has in the port of Mombasa,” Mturi-Wairi said. This, she said, has been the result of consistent improvement programmes that have been put under the Mombasa Port Development...

More strategic investment in Africa’s ports can accelerate growth and development by strengthening trade as these are gateways for 80 percent of merchandise trade by volume and 70 percent by value, globally. This is according to an analysis report of port development in sub-Saharan Africa (SSA) issued by the global auditing firm PwC on Thursday which stated that Africa needed to take advantage of the economic potential of its ports and shipping sector 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,” the PwC report said. “However, port investment must be channeled appropriately to ensure financial sustainability and economic growth. Investment is not always about building new ports or terminals, investment spent on infrastructure without cognisance of the efficiency and effectiveness of the performance of the port may not produce the desired results.” Dr. Andrew Shaw, PwC Africa Transport and Logistics leader, said: “Ports are a vital part of the supply chain in Africa, with many ports having a far-reaching hinterland often spanning a number of countries, which makes them a natural focus for regional development. “In this report, we show that the global transportation and logistics industry can no longer afford to ignore developments in Africa. Logistics service providers and ports, in particular, will continue...