What Kigali’s new inland port could mean for trade in East Africa
The first phase of the construction of a US$35m inland container logistics centre is currently underway on a 30-hectare plot of land in eastern Kigali, the capital of Rwanda. The completed depot will provide warehousing, truck parking, a container yard and other auxiliary services, and is expected to improve the flow of goods for both regional and international markets.
Dubai-based port operator, DP World, has been granted the 25-year concession to finance, construct and manage the centre. The first 90,000m² construction is expected to be completed in 2018 and will consist of a 12,000m² container yard and a 19,600m² warehousing facility. The facility is estimated to have an annual capacity of 50,000 twenty-foot equivalent units (TEUs) and 640,000 tonnes of warehousing space.
How we made it in Africa asks Sultan Ahmed Bin Sulayem, chairman of DP World, about what the logistics centre could mean for regional trade and the growth of other industries in East Africa.
Why Rwanda? What makes Rwanda an attractive location to set up this project in East Africa?
We have a clear strategic focus on Africa where we currently manage and operate container terminals in six countries with investments underway in Egypt, Mozambique, Algeria and Senegal to further expand our capacity in the region.
Rwanda is a resilient, forward-looking country with a vision to elevate to a middle-income service knowledge-based economy by 2020. It is also ranked as the most competitive country in East Africa by the World Economic Forum’s global competitiveness report.
The government of Rwanda has clear objectives to develop its economy by boosting exports and reducing logistics costs that may impact competitiveness. They also have a vision to create a commercial and logistics hub for neighbouring landlocked countries.
We believe our expertise in investing and managing logistics facilities will contribute to the country and we are delighted that the government has chosen DP World as a partner for this strategic development project.
Can you provide an example of how this new logistics centre could improve ease of doing business in Rwanda, and possibly the region?
Transport costs in East Africa are on average still about 60% higher than in the US and Europe, according to TradeMark East Africa.
In 2010 it took 18 to 20 days to get a container from Mombasa (Kenya) to Kampala (Uganda) by road. Now it can take around eight to 10 days. There has been a silent revolution in logistics with reductions in costs.
High trade costs hold back economies so initiatives that increase physical access to markets enhance the trade environment and improve business competitiveness.
We note that the East African Community is leading in regional integration and free movement of goods and people on the continent. A new report unveiled at the ongoing African Development Week meeting at Addis Ababa indicated the cross-border movements were easiest between Kenya, Uganda, Rwanda, Burundi and Tanzania.
Rwanda aims to enhance the country’s logistics industry to support the export of products for regional and international markets. The DP World Kigali Logistics Centre will contribute to this.
The facility will be built around a one-stop-shop concept that will offer traders all they require in terms of facilities, government institutions and international standards that will enable them to focus more on their core businesses and expertise.
What opportunities does this create for manufacturing companies, or those operating in other industries?
Connective infrastructure is needed in Africa where ports become part of a multi-modal transport hinterland to ensure that goods continue to be moved quickly beyond the port itself. Projects such as this contribute to these developments and create an environment for companies and business across sectors to operate.
Our ports in Africa have shown us how the region has enjoyed strong growth over the last 10 years, leading to rising incomes, falling poverty and a step toward economic diversification. However, all this has also placed an increasing strain on existing inland and marine infrastructure. If Africa’s countries and regions were better connected, market sizes would increase and encourage greater foreign investment.
A recent paper commissioned and published by DP World in association with the Economist Intelligence Unit, under the title of ‘Africa At The Crossroads: Bridging The Infrastructure Gap’ concluded that African countries need a solid infrastructure foundation on which to place the building blocks of their economies.
As a global trade enabler, DP World will use its extensive global expertise to boost the logistics infrastructure of the country whose economy is mainly import driven with low export patterns and is mainly focused on the mining and agricultural sectors.
Stronger infrastructure affects all aspects of economic development. It lowers production and transport costs, supporting the profitability of firms. By connecting countries and sub regions, it spurs the growth of commerce benefiting all.
How are returns generated on a project like this, and when do you expect DP World will start to see its investment become profitable?
Infrastructure projects are long term and returns are factored into these timescales. Our Rwanda concession is for 25 years and we will work closely with the government to support the country’s growth.