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The population of Africa has grown rapidly over the past century, making it the second most populated continent, with around 1.37bn people and a growth rate of more than 2.5% per year. Most recent reports show that, if it continues at its current growth rate, Africa’s population will double by 2050, and its urban population is expected to nearly triple by that time. This growth, which is adding the equivalent of the population of France every two years, will shape social and economic fortunes in the coming decades, especially in sub-Saharan Africa. For as long as I’ve been covering the container shipping market, Africa has been held up as the sleeping growth giant Africa is seen by many as a key economy for the coming 30 years with a growing population and growing position in the world economy. It is a vital supplier of minerals, metals, energy and labour as well as a constantly growing market for international suppliers. According to UK-based Shipping Strategy, imports to Africa are worth around $0.6trn a year, the largest being petroleum products, foodstuffs, road vehicles, medicines, computers and telephones. More than half of Africa’s imports by value go to the top five importers: South Africa 17%, Egypt 14%, Morocco 9%, Algeria 9% and Nigeria 7%. 40% of Africa’s imports come from the top five supplier nations with China leading at 17.2% followed by France, the US, Germany and India. In terms of export, African dry bulk cargoes grew by 4% last year, and LNG plays in the Gulf of Guinea and Tanzania-Kenya range offer a lot of potential as well as hydrogen in the northwest. The accelerating growth of Africa’s consumer class is rapidly increasing the demand for imported goods and, hence, the need for improvements in containerised cargo transports services that would allow delivering the goods efficiently and at minimum cost. The general accord is that in order to compete and make use of its resources including its mining and agricultural products Africa will require efficient ports and better infrastructure. Landlocked links Martin Humphreys, the lead transport economist at the World Bank, believes that the existing port facilities and current operational practices in the East and Southern Africa region are inadequate, with insufficient capacity to serve not only their coastal countries, but also the hinterland of landlocked nations. Africa has 16 landlocked developing countries, which represent 30% of the region’s population, and which are entirely dependent on the key trading corridors through neighbours for access to the sea. Trade costs for these countries tend to exceed the global average three to four times. In some of these countries, transport costs represent upwards of a quarter of the final price of goods. The World Bank highlights the private sector as critical for the development of African ports. Beyond the near term, pre-Covid-19 estimates suggested that sustained and inclusive growth would require billions in spending by 2030, which it believes will simply not be feasible without significant investment from the private sector. Jan Hoffmann, head of the United Nations Conference on Trade and Development’s (UNCTAD) trade logistics branch, tells Splash Extra that what is still pending in Africa is improving the hinterland connectivity and inter-port competition for import/export cargo. “The best way to improve maritime connectivity for African ports is to invest in trade and transit facilitation. By making cross-border transit easier and thus opening up choices for shippers to trade through neighbouring countries’ seaports, the most efficient ports will benefit and attract more cargo from a wider hinterland,” Hoffmann says. Major economic powers are taking a great interest in Africa’s port sector. China, for example, as the continent’s top trade partner, also wants access to Africa’s raw materials for its industries. This has resulted in the country’s massive investment plans which include over 40 ports, primarily in East Africa and the Gulf of Guinea. More port investment plans are getting announced almost weekly China has a treaty port in Djibouti, other investment across African rail and infrastructure, such as Simandou iron ore project in the southeast of Guinea, and is also a major partner in Nigeria’s Lekki Deep Sea Port. China has lent approximately $150bn to African nations for infrastructure development, according to Shipping Strategy, but it is not the only one making a move on this new haven, often seen as the last frontier for global economic growth. Boxport race Looking at container ports, Africa’s top importers also have some of the best infrastructure on the continent. In Morocco, Tanger Med stands out as the largest in capacity terms, followed by Port Said in Egypt and Port of Durban in South Africa. Egypt, Morocco and South Africa are the sole African countries currently fit to handle more than 3m teu. Simon Heaney, senior manager of container research at Drewry, says that in terms of port developments there won’t be any huge leaps in African port capacity and that none of the African regions stood out in absolute terms. Nevertheless, with only a few spots left for continental and regional hubs, several African ports have entered into an investment race supported by the private sector. In West Africa, Togo’s Port of Lomé landed a $430m boost from MSC subsidiary TIL, while APM Terminals and Bolloré have announced a total investment of $1.5bn to expand and modernise Ghana’s Port of Tema and lift its capacity to 3.5m teu over time. The Port of Abidjan in Ivory Coast is splashing $488m to build a second container terminal, which would increase its capacity to 1.5m teu. Further projects in West Africa include Nigeria’s $1.95bn Lekki megaproject and Badagry deepsea port. Lekki Port in Nigeria, whose sub-concession was awarded to French containerline CMA CGM, could become a regional hub if supported by the surrounding road infrastructure. It will have a capacity of 2.7m teu and ability to accommodate 18,000 teu ships. The Lekki Port LFZ Enterprise recently received $60m, which is the first installment of a $629m loan facility from the China Development Bank. What is still pending in Africa is improving the hinterland connectivity and inter-port competition for import/export cargo With its prime location on the Horn of Africa, the Port of Djibouti is believed to have key advantages necessary for developing into a regional hub. Djibouti has been recognised as the top container port in Africa and 61st globally by the World Bank and IHS Markit in a recently published global container port performance index. The port has the capacity to accommodate 100,000 dwt vessels and an established link with the Ethiopian market. China Merchants Group, China’s biggest port operator, signed a $350m investment deal with the state-owned company Great Horn to turn the Port of Djibouti into an international business hub. The port is part of a $3bn development project that also includes a free-trade zone and business center. Also keen to offer Ethiopia shippers an export gateway is the brand new Port of Lamu, which opened to much fanfare in northern Kenya last week. Although investments keep coming in to improve the ports and their connectivity to hinterlands, requirements continue to be very high on the continent. Investment checklist “Given the growth there are significant plans for investment, and more are getting announced almost weekly,” Humphreys from the World Bank says. However, he points out that those investing in ports need to ensure it is the right move, that there is matching investment on the land side, port-city interface and hinterland connectivity, digitalisation and human capital. DP World sees Africa as its key focus area. The Dubai-based terminal operator is expanding its network there with the recent concession win for Luanda, an expansion project is underway in Berbera and progress has also been made towards the first deepsea port in the Democratic Republic of Congo. Inland logistics plays are taking place in Ethiopia, where DP World recently inked an MOU to explore development co-operation. “The cost of inefficient logistics hinders African products being competitive on the world market. We want to fix that,” a spokesperson for DP World tells Splash Extra. “It’s not just about ports, but also about roads, rail, inland logistics hubs, digital tools to make the movement of cargo more efficient for customers,” the spokesperson adds. German liner Hapag-Lloyd says that as Africa has to catch up in terms of infrastructure the company will see various projects – be it ports, terminals, trains and road infrastructure improvements. All these investment plans to take advantage of the growing consumer market in Africa face several challenges, including energy transition and the ongoing Covid-19 crisis on the continent. According to the International Monetary Fund (IMF), the pandemic is expected to undo years of economic and social progress and leave lasting scars on Africa’s economies. While the extent of this is hard to predict at the present time, it is likely that the development of Africa’s ports will be affected. “The outlook for sub-Saharan Africa continues to face greater-than-usual uncertainty. While pandemic-related risks dominate, other factors such as access to external financing, political instability, domestic security, or climate shocks could jeopardise the recovery,” says Abebe Aemro Selassie, director of the IMF’s African department. The IMF believes the gap between sub-Saharan Africa’s growth and the rest of the world is expected to widen further over the next five years. Despite extensive investments and progress in the past years, much remains to be done in order to streamline port traffic. Drewry’s Container Forecaster for 2025 is projecting that Africa’s share of world port handling will stay static at around 3.6% over the period. “For as long as I’ve been covering the container shipping market, Africa has been held up as the sleeping growth giant, but while the potential remains we do not foresee it happening imminently,” Heaney from Drewry notes. Consultants at Drewry do not expect the current level of port investment in the region to significantly increase its container share, rather it will benefit ports that wish to retain or attract direct services. The recently released Container Port Performance Index by the World Bank and IHS Markit clearly illustrates the comparative standing and performance of African container ports. The top 50 ranked ports are dominated by ports in East Asia, with ports in the Middle East and North Africa region, such as King Abdullah port, Salalah in Oman, Khalifa port in Abu Dhabi, and Tanger Med as the notable exceptions. No ports in sub-Saharan Africa rank in the global top 50 container ports. "Although many African ports have benefited from private sector investments and reforms, not all benefits and advances have been passed on to the clients in the form of lower port charges, as most ports still count on captive hinterlands," advises UNCTAD's Hoffmann.

Africa, the new frontier for shipping

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