As Africa gears up for trade, its harbours are going private

Dakar, Senegal

South Africa is the latest country to express interest in privatising key ports as African governments push for reforms to improve the efficiency and competitiveness of maritime facilities in order to grow both imports and exports.

The South African government recently announced it had begun the search for private sector funding and expertise for two of its container terminals – at the ports of Durban and Ngqura – to shore up their dwindling performance.

Durban, the largest container port in Africa in terms of capacity is also the country’s main container port. Both Durban and Ngqura container terminals are currently operating well below their installed capacities of 2.4 million twenty-foot equivalent units (TEUs) at Durban Container Terminal and 1.3 million TEUs at the Ngqura terminal.

World Bank and IHS Markit, in their Global Container Port Performance Index 2020 rank the two as worst performers (along with the facility in Luanda), with Ngqura trailing at the bottom out of 351 ports and Durban placed at position 349. Luanda’s operations have subsequently been outsourced to Dubai-based ports firm, DP World.

The index ranks Djibouti as the top African port on the continent and 61st in the world. This was attributed to ongoing improvements in efficiency and productivity at the ‘world-class’ container port.

“The analysis is based on total port hours per ship call, defined as the elapsed time between when a ship reaches a port to its departure from the berth having completed its cargo exchange,” says the index.

The ranking affirms the goal of one of Africa’s smallest countries of becoming a leading hub in maritime trading, with its growth being likened to that of Singapore.

Since the last quarter of 2020, there has been a substantial increase in activities in Africa’s port markets, with governments closing multi-million investment agreements to build new ports and improve efficiencies of existing ones.

Most of these agreements were closed with DP World. The Dubai-based firm has aggressively increased its presence in the continent as it chases global sector-leading Hutchison Ports. Hutchison only manages two ports on the continent – Alexandra and Dar es Salaam. By contrast, DP World operates marine and inland container terminals in several countries, including Algeria, Angola, Egypt, Mozambique, Nigeria, Rwanda, Senegal, Somalia and South Africa.

In December 2020, the government of Senegal signed a $1.1 billion agreement with DP World to develop a deepwater port at Ndayane. This is the single largest investment ever made by the firm in Africa.

Senegalese authorities said in a statement the project would provide a strong engine of growth for the next phase of the country’s ‘Plan Senegal Emergent’.

Earlier in March, DP World began operations at the Port of Luanda following a 20-year concession agreement with the Angolan government, signed in January.

Barely two months ago, Somaliland opened a new container terminal at Berbera Port, following the completion of the project’s first phase that has more than tripled the port’s container capacity from 150,000 to 500,000 TEUs annually.

Last year, the Egyptian government entered into a 38-year concession with Hutchison Ports to construct a new port near Alexandria at a cost of $730 million.

Kenya and Dar es Salaam have been upgrading their ports in a race to become the major trade hub in East Africa, with Dar es Salaam port run by Hutchison.

China Communications Construction Company is constructing an oil terminal at Kenya’s Mombasa Port. The Chinese firm is also the contractor building Lamu port in Kenya’s north, which will have a capacity to handle up to 18,000 TEUs.

The Lamu port falls under Kenya’s LAPSSET corridor programme, part of the country’s Vision 2030 Strategy which seeks to take the East African nation to industrialised, middle-income status.

With DP World also in contention to take control of South Africa’s Imperial Logistics for some $890 million and given its aggressive expansion on the continent, it is likely to make a significant bid for Durban and Ngqura. Whether or not Hutchison also bids, the race to improve Africa’s ports is well and truly on.